Wayne, Inc.'s outstanding common stock is currently selling in the market for ​$54. Dividends of ​$3.16 per share were paid last​ year, return on equity is 35 ​percent, and its retention rate is 26 percent.   a.  What is the value of the stock to​ you, given a required rate of return of 17 ​percent? b.  Should you purchase this​ stock?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Wayne, Inc.'s outstanding common stock is currently selling in the market for
​$54.
Dividends of
​$3.16
per share were paid last​ year, return on equity is
35
​percent, and its retention rate is
26
percent.
 
a.  What is the value of the stock to​ you, given a required rate of return of
17
​percent?
b.  Should you purchase this​ stock?
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