accounting constant growth model

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Mar 26, 2007, 06:31 PM

sarah7630

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Join Date: Mar 2007

Posts: 1

accounting constant growth model

Constant growth model. Here are data on two stocks, bth of which have discount rate of 15%.

Stock A Stock B
Return on equity 15% 10%
Earnings per share $2.00 $1.50
Dividends per share $1.00 $1.00

a. What are the dividend payout ratios for each firm?
b. What are the expected dividend growth rates for each firm?
c. What is the proper stock price for each firm?

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