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7 Common stock value-Constant growth McCracken Roofing, Inc., common stock paid a dividend of...

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Finance

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Common stock value-Constant growth McCracken Roofing, Inc., common stock paid a dividend of $1.25 per share last year. The company expects earnings and dividends to grow at a rate of 5% per year for the foreseeable future. a. What required rate of return for this stock would result in a price per share of $28? b. If McCracken expects both earnings and dividends to grow at an annual rate of 11%, what required rate of return would result in a price per share of $28? a. The required rate of return for this stock, in order to result in a price per share of $28, is %. (Round to two decimal places.)

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