The Return on Equity of KillerApps Inc

question 39

Multiple Choice

The return on equity of KillerApps Inc.is 20% of which it pays out 30% as dividends and reinvests the rest in the company.The company is expected to pay a dividend of $1.50 next year and the current stock price is $30.The cost of equity of KillerApps is:

• A)11.30%
• B)19.00%
• C)19.70%
• D)30.00%

---

Definitions:

Property, Plant, and Equipment

Tangible assets that are held for use in the production or supply of goods or services, rental to others, or administrative purposes and are expected to be used during more than one period.

Classified Balance Sheet

A balance sheet that organizes a company’s assets, liabilities, and equity into subcategories for clearer understanding.

Adjusted Trial Balance

A listing of all company accounts and their balances after adjustments, serving as the basis for financial statement preparation.

Return on Assets Ratio

A measure of how effectively a company uses its assets to generate profit, calculated as net income divided by total assets.