Multiple Choice
What is the return on equity for a firm that has a constant dividend growth rate of 7 percent and a dividend payout ratio of 60 percent?
A) 2.80 percent
B) 4.20 percent
C) 11.67 percent
D) 17.50 percent 7% = ROE x plowback ratio
= ROE x (1 - .6)
= ROE x .4
Correct Answer:
Verified
Correct Answer:
Verified
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