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DobbyDoo's earnings per share are expected to be $2 at the end of the year. It...

DobbyDoo's earnings per share are expected to be $2 at the end of the year. It intends to plowback 58% of its earnings and the required rate of return on its stock is 9.4%. What is the minimum rate of return the firm must earn on reinvested earnings for the stock price to not decline? Enter your answer as a percentage rounded to two decimal places (e.g., 5.64%).

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Answer #1

Minimum rate of return on reinvested earnings will be such that it is equal to the required rate of return on stock

hence, the answer is 9.4%

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