Arts and crafts, Inc., will pay a dividend of $2 per share in 1 year. It sells a

Question

Arts and crafts, Inc., will pay a dividend of $2 per share in 1 year. It sells at $40 a share, and firms in the same industry provide an expected rate of return of 13%. What must be the expected growth rate of the company's dividends? (Do not round intermediate calculations. Enter your answer as a whole percent) Expected growth rate Eastern Electric currently pays a dividend of about $1.95 per share and sells for $32 a share. If investors believe the growth rate of dividends is 4% per year, what rate of return do they expect to earn on the stock? (Do not round intermediate calculations Enter your answer as a percent rounded to 2 decimal places) Rate of return % if investors' required rate of is 12% what must be the growth rate they expect of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places) Growth rate % If the sustainable growth rate is 4% and the playback ratio is 2, what must be the return earned by the film on its new investments? (Enter your answer as a percent rounded to 2 decimal places) Rate of return %

Explanation / Answer

Growth rate (g) r-D1÷P0 Here, Stock price (P0) $                                     40.00 Expected dividend (D1) $                                        2.00 Required return ( r) 13.00% Growth rate (g) 8.00% 13%-2÷40

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