Constant-Growth Model. Here are data on two stocks, both of which have discount rates of 15 percent
Q-20 Constant-Growth Model
Constant-Growth Model. Here are data on two stocks, both of which have discount rates of 15 percent:
Return on equity
|
15%
|
10%
|
Earnings per share
|
$2.00
|
$1.50
|
Dividends per share
|
$1.00
|
$1.00
|
What are the dividend payout ratios for each firm?
What are the expected dividend growth rates for each firm?
What is the proper stock price for each firm?
