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Please use excel to explain formulas (Common stock valuation) Assume the following: - the investor's required rate of return is 13.5 percent, - the expected

image text in transcribedimage text in transcribedPlease use excel to explain formulas

(Common stock valuation) Assume the following: - the investor's required rate of return is 13.5 percent, - the expected level of earnings at the end of this year (E1) is $12, - the retention ratio is 35 percent, - the return on equity (ROE) is 14 percent (that is, it can earn 14 percent on reinvested earnings), and - similar shares of stock sell at multiples of 7.558 times earnings per share. Questions: a. Determine the expected growth rate for dividends. b. Determine the price earnings ratio (P/E1). c. What is the stock price using the P/E ratio valuation method? d. What is the stock price using the dividend discount model? earnings in the form of dividends? f. What have you learned about the relationship between the retention rate and the P/E ratios

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