Common Stock Valuation Model


Develop a valuation model for a common stock assuming the most recent EPS of the company is $2.50, the retention ratio is 60%, the assumed growth rate in earnings per share is 4%, and the required return demanded by shareholders on this investment is 10%. Show each step in generating the resulting valuation
For the valuation model in problem 4, show all valuation results assuming the growth rate is 3%, 4% and 5% and the retention rate is 50%, 60% and 70%.