XYZ Company has expected earnings of $3.00 for next year and usually retains 40 per cent for future growth. Its dividends are expected to grow at a rate of 10 per cent indefinitely. If an investor has a required rate of return of 16 per cent, what price would he be willing to pay for XYZ stock?

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The Answer of XYZ Company has expected earnings of $3.00 for next year and usually retains 40 per cent for future growth. Its dividends are expected to grow at a rate of 10 per cent indefinitely. If an investor has a required rate of return of 16 per cent, what price would he be willing to pay for XYZ stock?

XYZ Company Has Expected Earnings of $3