Exhibit 12.4 Use the Information Below for the Following Problem(S)

question 87

Multiple Choice

Exhibit 12.4
Use the Information Below for the Following Problem(S)
Assume that the dividend payout ratio will be 45 percent when the rate on long term government bonds falls to 9 percent. Since investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 16 percent return. The return on equity will be 14 percent.
-Refer to Exhibit 12.4.To what price will the market rise if the earnings expectation is $10.00?

• A) $71.40
• B) $66.30
• C) $54.20
• D) $77.00
• E) $51.10

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Definitions:

Deforestation

The removal of trees and forests, typically for agriculture or urban development.

Biodiversity

The variety of life in the world or in a particular habitat or ecosystem, indicating the health and resilience of biological systems.

Water Supplies

The availability of water resources to meet the consumption needs of individuals, communities, and ecosystems.

National Parks

Designated natural areas protected for public enjoyment and preservation of wildlife, usually operated by national governments.