Salted Chips Company Is Expected to Have EPS in the Coming

question 68

Multiple Choice

Salted Chips Company is expected to have EPS in the coming year of $2.50. The expected ROE is 12.5%. An appropriate required return on the stock is 11%. If the firm has a plowback ratio of 70%, the growth rate of dividends should be

• A) 5.00%.
• B) 6.25%.
• C) 6.60%.
• D) 7.50%.
• E) 8.75%.

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Definitions:

Strategic Plan

A plan that identifies long-term directions for the organization.

Implement

To put into effect or action a plan, idea, or policy.

Long-Range Plan

A detailed roadmap designed by an organization to guide its direction, actions, and decisions over a period of years, focusing on achieving strategic goals.

Functional Plan

A strategic action plan for a specific department focusing on its unique objectives and methods.