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%

---

Definitions:

Claim

A statement asserting something to be true, often without providing evidence as proof but typically requiring justification or validation.

Settlement

The resolution or agreement reached between parties in a dispute, often involving the payment or receipt of money without going to trial.

Professional Tone

A manner of communication that is formal, respectful, and suited for business or workplace environments.

Routine, Positive Messages

Messages that are regularly communicated and convey affirmative or positive information.