A firm has D0 = $2.50, E0 = $4, a forecasted dividend growth rate of 8%, and you require a 12% rate of return. The current stock price is $48. The stock
A) is undervalued in the market.
B) should be sold if owned.
C) has a retention ratio of 62.5%.
D) has a payout ratio of 37.5%.
Correct Answer:
Verified
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