High Tech Chip Company Paid a Dividend Last Year of $2.50.The

question 33

Multiple Choice

High Tech Chip Company paid a dividend last year of $2.50.The expected ROE for next year is 12.5%.An appropriate required return on the stock is 11%.If the firm has a plowback ratio of 60%, the dividend in the coming year should be

• A)$1.00.
• B)$2.50.
• C)$2.69.
• D)$2.81.

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Definitions:

Weighted-Average Method

An inventory valuation method that calculates the cost of goods sold and ending inventory based on the average cost of all goods available for sale during the period.

Equivalent Units

A concept in cost accounting used to equate units partially completed at the end of a period to units of finished goods.

Materials Cost

The total expense incurred by a company to purchase raw materials used in the production of goods or services.

Process Costing

A costing method used for homogeneous products, where costs are accumulated over a period and assigned to large numbers of identical units.