Exhibit 12.3 Use the Information Below for the Following Problem(S)

question 2

Multiple Choice

Exhibit 12.3
Use the Information Below for the Following Problem(S)
Assume that the dividend payout ratio will be 55 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 8 percent and investors will require a 7 percent return. The return on equity will be 13 percent.
-Refer to Exhibit 12.3.What is your expectation of the market P/E ratio?

• A) 37.69
• B) 24.92
• C) 58.15
• D) 55.02
• E) 47.82

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Spending

The amount of money paid out or expended, typically on items or services.

Factory Closes

This describes a situation where a manufacturing facility ceases operations, potentially due to economic, operational, or strategic decisions.

Unemployed Workers

Individuals who are capable of working and are actively seeking work but are not currently employed.

Dine Out

The action of eating a meal outside one's home, typically in a restaurant.