Suppose a Firm's Price/earnings Ratio Is 10

question 26

Multiple Choice

Suppose a firm's price/earnings ratio is 10.It expects to pay a dividend of $1.20 per share to maintain a 60% payout ratio.What is the firm's required return if its return on equity is 13.5%?

• A)14.10%
• B)13.20%
• C)12.30%
• D)11.40%

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