What is the expected rate of dividend growth

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Reference no: EM131308065

Analysts expect that H.O.T. Ltd will report earnings of $300 million one year from today. H.O.T.’s policy is to pay 75% of its earnings out in dividends (it paid its dividends already for this year). The company has 60,000,000 shares outstanding and the value of its book equity is $2.4 billion. Its required rate of return is 10%. Assume that the numbers above are representative of the foreseeable future.

(a) What is the expected rate of dividend growth?

(b) What is the price of the stock today?

Reference no: EM131308065

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