River Co Has Paid a Dividend $2 Per Share Out of of Earnings

question 8

Multiple Choice

River Co. has paid a dividend $2 per share out of earnings of $4 per share. If the book value per share is $25 and is currently selling for $40 per share, calculate the required rate of return on the stock.

• A) 15.2%
• B) 7.2%
• C) 14.7%
• D) 13.4%

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Definitions:

Quantity

The amount or number of a material or immaterial entity that is considered as a unit or in a measurable amount.

True Proposition

A statement that accurately describes a fact or situation, aligning with reality.

Subject Class

A group or category that shares certain characteristics, forming the subject of logical or philosophical analysis.

Quantity

The amount, number, or extent of something, often measurable.