Wayne, Inc.s outstanding common stock is currently selling in the market for $33. Dividends of $2.30 per

Question:

Wayne, Inc.’s outstanding is currently selling in the market for $33. Dividends of $2.30 per share were paid last year, return on equity is 20 percent, and its retention rate is 25 percent.
a. What is the value of the stock to you, given a 15 percent required rate of return?
b. Should you purchase this stock?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...