You Expect KT Industries (KTI) Will Have Earnings Per Share

You expect KT Industries (KTI) will have earnings per share of $5 this year and expect that they will pay out $1.25 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 13% and their equity cost of capital is 15%. The expected growth rate for KTI's dividends is closest to ________.

A) 11.3%
B) 9.8%
C) 5.9%
D) 3.9%

Correct Answer:

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