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please answer a-d (Common stock valuation) Assume the following: the investor's required rate of retum is 14 percent, . the expected level of earnings at
please answer a-d
(Common stock valuation) Assume the following: the investor's required rate of retum is 14 percent, . the expected level of earnings at the end of this year (Eq) is $8. the retention ratio is 40 percent, the return on equity (ROE) is 13 percent (that is, it can earn 13 percent on reinvested earnings), and similar shares of stock sell at multiples of 6.819 times earnings per share. Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (PE). c. What is the stock price using the P/E ratio valuation method? d. What is the stock price using the dividend discount model? a. What is the expected growth rate for dividends? % (Round to two decimal places.) Step by Step Solution
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