Question: Topic: Common Stock Valuation Question: Wayne, Inc.'s outstanding common stock is currently selling in the market for $33.Dividends of $2.30 per share were paid last

Topic:

Common Stock Valuation

Question:

Wayne, Inc.'s outstanding common stock is currently selling in the market for $33.Dividends of $2.30 per share were paid last year, return on equity is 20%, and its retention rate is 25%.

a. What is the value of the stock to you, given a 15% required rate of return?

b. Should you purchase this stock?

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