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Berberich Corporation net income this year is $800,000. The company generally retains 35% of net income for reinvestment. The company's common equity currently has a
Berberich Corporation net income this year is $800,000. The company generally retains 35% of net income for reinvestment. The company's common equity currently has a book value of $5,000,000. They just paid a dividend of $1.37, and the required rate of return on this stock is 12%. Compute the value of this stock if dividends are expected to continue growing indefinitely at the company's sustainable growth rate.
a) $22.61 b) $11.62 c) $4.35 d) $15.63
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