Stock A pays a dividend of $3 per share in year zero. In year 1, the dividend is $3.3 per share,. The dividend growth rate is constant and the return on equity is 25%.
1. What is earnings per share in year 0 ?
A) $6
B) $5
C) $4
D) $ 3
E) None of the above
2. What is earnings per share in year 1 ?
A) $6.0
B) $5.5
C) $4.5
D) $ 5.0
E) None of the above
3. What is earnings per share in year 2 ?
A) $6.05
B) $5.65
C) $4.75
D) $ 3.85
E) None of the above
4. What is the dividend per share in year 2 ?
A) $3.55
B) $3.63
C) $3.30
D) $3.75
E)None