Exhibit 12.1 Use the Information Below for the Following Problem(S)

question 56

Multiple Choice

Exhibit 12.1
Use the Information Below for the Following Problem(S)
Assume that the dividend payout ratio will be 65 percent when the rate on long-term government bonds falls to 8 percent. Since investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 15 percent return. The return on equity will be 12 percent.
-Refer to Exhibit 12.1.What is the expected sustainable growth rate?

• A) 2.80%
• B) 4.20%
• C) 5.25%
• D) 7.80%
• E) 9.75%

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Definitions:

Unconsciously Resents

Experiencing feelings of resentment or antagonism towards someone or something without being aware of these feelings.

Successful Career

Achieving personal and professional goals in one's chosen occupational field, often marked by advancements, recognition, and satisfaction.

Psychoanalysis

A therapeutic approach developed by Freud that explores unconscious motivations and conflicts to treat psychological disorders.

Psychodynamic Theory

A psychological theory that posits that human behavior and emotions are strongly influenced by unconscious motives and conflicts, originating in early childhood experiences.