Multiple Choice
XYZ Company has expected earnings of $3.00 for next year and usually retains 40 percent for future growth.Its dividends are expected to grow at a rate of 10 percent indefinitely.If an investor has a required rate of return of 15 percent,what price would he be willing to pay for XYZ stock?
A) $12.50
B) $25.00
C) $30.00
D) $36.00
Correct Answer:
Verified
Correct Answer:
Verified
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