Answer: $20.15

**Explanation:** The intrinsic value of the stock is calculated using the Gordon growth model: \[ V_0 = \frac{D_1}{r - g} \] Where: - \( D_1 = D_0 \times (1 + g) = \$1.00 \times 1.048 = \$1.048 \) - \( g = \text{ROE} \times \text{Retention rate} = 0.12 \times (1 - 0.60) = 0.048 \) - \( r = 10\% \) (required rate of return) Substituting the values: \[ V_0 = \frac{\$1.048}{0.10 - 0.048} = \frac{\$1.048}{0.052} \approx \$20.15 \] **Why other options are incorrect:** - **A:** Incorrectly uses ROE (12%) instead of the required rate of return (10%). - **B:** Incorrectly uses \( D_0 \) instead of \( D_1 \).

Author: LeetQuiz Editorial Team