Company a Paid a $1

Company A paid a $1.00 dividend per share last year and is expected to continue to pay out 40% of earnings as dividends for the foreseeable future.If the firm is expected to generate a 10% return on equity in the future,and if you require a 12% return on the stock,the value of the stock is _______.

A) $17.67
B) $13.00
C) $16.67
D) $18.67
E) none of these

Correct Answer:

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