Eastern Electric currently pays a dividend of about $1.71 per share and sells for $34 a share..

Eastern Electric currently pays a dividend of about $1.71 per share and sells for $34 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 3% and the plowback ratio is 0.6, 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.)**

Eastern Electric currently pays a dividend of about $1.71 per share and sells for $34 a share.