10.4

(Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling in the market for $33. Dividends of $3.11 per share were paid last year, return on equity is 34 percent, and its retention rate is 27 percent. a. What is the value of the stock to you, given a required rate of return of 18 percent? b. Should you purchase this stock? a. Given a required rate of return of 18 percent, the value of the stock to you is $ www (Round to the nearest cent.)

tate is pectent 2. What x the value of the stock to pou given a sequied tale of return of 40 percene? b. Shicald you purchase this stock? 4. Given a sequred rate of retuen of tis percent, the value dife slock 10 veu an 1 (Ppound to me nearent cent