Common stock valuation)Wayne, Inc.'s outstanding common stock is currently selling in the market for

$28.

Dividends of

$3.21

per share were paid last year, return on equity is

18

percent, and its retention rate is

25

percent.a.What is the value of the stock to you, given a required rate of return of

15

percent?

b.Should you purchase this stock?

Question content area bottom

Part 1

a.

Given

a required rate of return of

15

percent, the value of the stock to you is

$enter your response here.

(Round to the nearest cent.)

Part 2

b.Should you purchase this stock? (Select from the drop-down menus.)

You

should

should not

purchase the stock because your expected value of the stock is

greater

than the current market price, indicating that the stock would be currently

underpriced

overpriced

in the market.