A stock will not pay dividends until three years from now. The dividend then will be $2.00 per share, the dividend payout ratio will be 40 percent, and return on equity will be 15 percent. If the required rate of return is 12 percent, which of the following is closest to the value of the stock? a. $27. b. $33. c. $53. d. $67.
A stock will not pay dividends until three years from now. The dividend then will be $2.00 per share, the dividend payout ratio will be 40 percent, and return on equity will be 15 percent. If the required rate of return is 12 percent, which of the following is closest to the value of the stock? a. $27. b. $33. c. $53. d. $67.
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 19P
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Financial Accounting Question please answer fast

Transcribed Image Text:A stock will not pay dividends until three years from now. The
dividend then will be $2.00 per share, the dividend payout
ratio will be 40 percent, and return on equity will be 15
percent. If the required rate of return is 12 percent, which of
the following is closest to the value of the stock?
a. $27.
b. $33.
c. $53.
d. $67.
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