Internal growth rate of the company

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Reference no: EM13155493

Dothan Inc. has a 10% ROE and a 30% dividend payout ratio. Its stock is currently selling at $50 per share and it recently paid a $2 dividend per share.

a) Calculate the internal growth rate of the company.

b) Find the expected dividend at the end of year 1 (next year's dividend).

c) If your required rate of return is 12%, find today's fair price to you. Should you purchase this stock?

Reference no: EM13155493

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