header bg

Question:

The value per share is closest to:

A $14.39.
Explaination

$3799_w592_h38.png$
Using the CAPM, the required rate of return $5605_w348_h19.png$= 9.20% + 1.4(14.0% − 9.2%) = 9.20% +6.72% = 15.92%
The retention ratio (RR) = 1 − dividend payout ratio = 1 − 0.30 = 0.70
The growth rate ($1264_w15_h12.png$ ) = (RR)(ROE) = (0.70)(10%) = 7.00%
$8712_w65_h16.png$ (dividend payout) = $4.00(0.30) = $1.20
Next year's dividend $5770_w143_h19.png$ = $1.20(1 + 0.07) = 1.284
$8008_w319_h43.png$