Problem:
Below are the data for two stocks, both of which have a discount rate of 10 percent: Stock A Stock B Return on equity 11% 13% Earnings per share $1.00 $2.20 Dividends per share $ .55 $1.20
Required:
Question 1: What are the dividend payout ratios for each firm?
Question 2: What are the expected dividend growth rates for each firm?
Question 3: What is the estimated stock price for each firm?
Question 4: Which stock has the higher market value of equity?
Note: Please show guided help with steps and answer.