The Following Financial Information Is Available on Rawls Manufacturing Company

question 73

Multiple Choice

The following financial information is available on Rawls Manufacturing Company: $\begin{array}{ll}\text {Current per share market price }& \$48.00\\\text { Current \( (t=0) \) per share dividend}&\$3.50 \\\text {Expected long-term growth rate }&5.0\% \\\end{array}$
? Rawls can issue new common stock to net the company $44 per share. Determine the cost of internal equity capital using the dividend capitalization model approach. (Compute answer to the nearest 0.1%.)

• A) 12.3%
• B) 13.4%
• C) 13.0%
• D) 12.7%

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Definitions:

Price Discrimination

The strategy of selling the same product to different customers at different prices based on various factors.

Pricing Tactics

Strategies used to set and adjust the price of products or services to achieve specific marketing objectives.

Wheeler-Lea Act

An amendment to the Federal Trade Commission Act in the United States, focusing on protecting consumers against unfair or deceptive acts or practices in commerce.

Robinson-Patman Act

An American federal statute that forbids practices that hinder competition among producers, notably price discrimination.