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McCracken Roofing, Inc., common stock paid a dividend of $1.38 per share last year. The...

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Question

Finance

McCracken Roofing, Inc., common stock paid a dividend of $1.38

per share last year. The company expects earnings and dividends to grow at a rate of

55% per year for the foreseeable future.

What required rate of return for this stock would result in a price per share of

$26

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

$26?

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