Luther Industries Has a Dividend Yield of 4

question 71

Multiple Choice

Luther Industries has a dividend yield of 4.5% and a cost of equity capital of 12%.Luther Industries dividends are expected to grow at a constant rate indefinitely.The growth rate of Luther's dividends is closest to:

• A)7.5%.
• B)5.5%.
• C)16.5%.
• D)12%.

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Definitions:

Output

The sum of all goods or services created by an enterprise, industry, or the economy over a certain period.

Economic Profits

The profit or loss calculated by taking out both straightforward and assumed expenses from total income.

Purely Competitive

A business environment marked by the proliferation of many small enterprises, a uniform product, and effortless procedures for both entry and exit.

Market Price

The ongoing rate at which a service or asset is traded in a particular market.