Babott Co. pays $3 current dividend out of its net income of $5. Babott Co. has return on investment of 15%, and a beta of its stock is 1.25. Its dividends are assumed to grow at a constant rate indefinitely. Assume market return of 12.5% and risk-free rate of 3.9%.

Please find the retention ratio, the growth rate of dividends, the require rate of return of its stock as well as utilize the constant growth model to find the value of the stock. Be sure to show all of your work.