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  3. eastern electric currently pays a dividend of $1.6

Eastern Electric currently pays a dividend of $1.65 per share and sells for $30 a...

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Accounting

Eastern Electric currently pays a dividend of $1.65 per share and sells for $30 a share.

a. If investors believe the growth rate of dividends is 4% per year, what rate of return do they expect to earn on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. If investors' required rate of return is 10%, what must be the growth rate they expect of the firm? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. If the sustainable growth rate is 6% and the plowback ratio is 0.4, what must be the rate of return earned by the firm on its new investments? (Enter your answer as a percent rounded to 2 decimal places.)

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