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Should buy the stock

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Reference no: EM132943446

You know the following concerning a common stock:

EPS: $3.00

Payout Ratio: 25%

P/E: 10

Annual rate of growth of 6% earnings and dividends

Investor's expected return: 10%

Problem 1: Should you buy this stock:

a. Yes, because it's slightly undervalued

b. No, because it is valued slightly above current market price

c. No, because it is considerably overvalued

d. Yes, because it has positive earnings

Reference no: EM132943446

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