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XYZ stock has an expected ROE = 8.5% per year, expected EPS of $9, expected dividends of $1.5 per share. Its discount rate is 13%.

XYZ stock has an expected ROE = 8.5% per year, expected EPS of $9, expected dividends of $1.5 per share. Its discount rate is 13%. What comes closest to its justified P/E ratio?

2.8

2.5

3

4.1

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