Question: ?( Common stock valuation ?) Dalton Inc. has a return on equity of 13.5 percent and retains 52 percent of its earnings for reinvestment purposes.

?(Common

stock

valuation?)

Dalton Inc. has a return on equity of

13.5

percent and retains

52

percent of its earnings for reinvestment purposes. It recently paid a dividend of

?$2.75

and the stock is currently selling for

?$38.

a. What is the growth rate for Dalton? Inc.?

b. What is the expected return for? Dalton's stock?

c. If you require a

14

percent? return, should you invest in the? firm?

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