Dividend payout ratio in the near future

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Gun manufacturer Bloodbath & Beyond expects earnings of $5 million on $20 million of equity this year, paying 60% of its earnings as dividends. It expects no changes in its ROE or dividend payout ratio in the near future. If the current dividends are $3.00 a share. Assuming BBB’s cost of equity is 19.5%, what is the stock’s intrinsic value.

Reference no: EM131314464

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