A Company Has a Dividend Payout Ratio of 35 Percent

question 52

Multiple Choice

A company has a dividend payout ratio of 35 percent.If the company's return on equity is 15 percent,what is the expected growth rate if no new outside financing is used?

• A) 4.50%
• B) 5.25%
• C) 7.75%
• D) 8.25%
• E) 9.75%

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Definitions:

Income

The financial gain earned by an individual or business, typically measured on an annual basis, coming from work, investments, or other sources.

APC

Average Propensity to Consume, which is the fraction of income that a person or economy spends rather than saving.

APS

The Average Propensity to Save, which is the proportion of total income that households plan to save rather than spend on consumption.

APS

Usually refers to Average Propensity to Save, an economic term that denotes the proportion of income that a person or population saves rather than spends on consumption.