a.
Using Constant Growth Model,
r = D1/Price + g
r = E1(0.28)/Price + 0.0335
r = 0.28/15 + 0.0335
r = 5.22%
b.
0.07 = 0.28/15 + g
g = 5.13%
Suppose the Price/Earnings Ratio for the S&P 500 is 15 and the dividend payout ratio of...
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