The No-Zip Snap Company Had Net Earnings of $127,000 This

question 67

Multiple Choice

The No-zip Snap Company had net earnings of $127,000 this past year. Dividends were paid of $38,100 on the company's equity of $1,587,500. If No-Zip has 100,000 shares outstanding with a current market price of $11 5/8 per share, what is the required rate of return?

• A) 9%
• B) 6%
• C) 4.2%
• D) 14%

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Definitions:

Market Value

The market rate for buying or selling an asset or service currently.

Ownership

The state or fact of exclusive rights and control over property, which can be tangible or intangible.

Valuation Allowance

An accounting procedure that an entity might use against its deferred tax assets indicating that it is more likely than not that some portion or all of the asset will not be utilized.

Trading Investments

Assets held by a firm for the purpose of selling them in the short term to generate profit from price fluctuations.