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Question:
1212dividend payout = 1 - earnings retention rate = 1 - 0.6 = 0.4
g = (retention rate)(ROE) = (0.6)(0.10) = 0.06
price = (E)(P/E) = (2) (10) = 20
Alternatively, dividend will be 40% of 2 earnings or 0.80, and
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