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atapprich
Jun 20, 2007, 06:43 PM
Two stocks both have discount rates 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