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THANK YOU IN ADVANCE PLEASE I NEED ANSWERS A-D (Common stock valuation) Assume the following: - the investor's required rate of return is 12 percent,
THANK YOU IN ADVANCE PLEASE I NEED ANSWERS A-D
(Common stock valuation) Assume the following: - the investor's required rate of return is 12 percent, - the expected level of earnings at the end of this year (E1) is $8, - 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 9.155 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 brice usina 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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