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

question 70

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.What is your expectation of the market P/E ratio?

• A) 5.42
• B) 7.14
• C) 6.63
• D) 6.25
• E) 5.11

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Definitions:

Nonprogrammed Decision

Decisions made in response to situations that are unique, are poorly defined and largely unstructured, and have important consequences for the organization.

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Technology-enabled processes that allow individuals and teams to work together more effectively, often in real-time, regardless of physical location.

Stakeholder Audit

An assessment process to identify and evaluate the interest, power, and influence of various stakeholders in relation to an organization’s objectives.

Knowledge Management

The method of acquiring, sharing, and efficiently leveraging information across a company.