A company has an ROE of 10%, an EPS of ($3.00), and a dividend per share D0

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A company has an ROE of 10%, an EPS of $$3.00$, and a dividend per share D0 of $$2.48$ . The discount rate is 7.00% and the current share price is $$75$ . The value of the company’s stock is _____________ and it is considered to be _____________ .

(Calculate the retention ratio and the sustainable growth rate and use the perpetual growth model.)

(A) $$112$ , undervalued

(B) $$48$ , undervalued

(D) $$112$ , overvalued

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