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Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, caloulate the value of a share of stock under
Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, caloulate the value of a share of stock under the following conditions: the investor's required rate of return is 12 percont, the expected level of earnings at the end of this year (E) is S4, the firm follows a policy of retaining 50 percent of its earnings, the return on equity (ROE) is 15 percent, and similar shares of stock sell at multiples of 11.110 times earnings per share. Now show that you got the same answor using the discounted dividend model. a. The stock price using the P/E ratio valuation method is (Round to the nearest cent
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