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Question:

The value per share is closest to:

A $14.39.
explanation

1212
Using the CAPM, the required rate of return = 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 ( ) = (RR)(ROE) = (0.70)(10%) = 7.00%
(dividend payout) = 4.00(0.30) = 1.20
Next year's dividend = 1.20(1 + 0.07) = 1.284

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