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# Stock Valuation

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Wayne, Inc.'s outstanding common stock is currently selling in the market for \$33. Dividends of \$2.30 per share were paid last year, and the company expects annual growth of 5 percent.

A. What is the value of the stock to you, given a 15 percent required rate of return ?
B. Determine the expected rate of return for the stock.

#### Solution Preview

Wayne, Inc.'s outstanding common stock is currently selling in the market for \$33. Dividends of \$2.30 per share were paid last year, and the company expects annual growth of 5 percent.

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

Next year's dividend= Last ...

#### Solution Summary

Dividend discount (constant growth) model has been used to value stock. The expert determines if a stock should be purchased.

\$2.49