Kirkevue Industries Pays Out All Its Earnings as Dividends and Has

question 18

Multiple Choice

Kirkevue Industries pays out all its earnings as dividends and has a share price of $24. In order to expand, Kirkevue announces it will cut its dividend payments from $2.00 to $1.80 per share and reinvest the retained funds. What is the growth rate that should be achieved on the reinvested funds to keep the equity cost of capital unchanged?

• A) 17.97%
• B) 15.33%
• C) 0.83%
• D) 18.23%

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Definitions:

Ethnically Biased

Prejudice or favoritism towards or against a particular ethnicity, often resulting in unfair treatment.

Vision Impairments

A range of conditions that affect the ability to see, ranging from partial sight to blindness.

Dysphemism

The use of derogatory or unpleasant terms instead of neutral ones to convey a negative attitude towards the subject.

Goodwill

The intangible asset that represents the value of a business's reputation, brand, and customer relationships.