Exhibit 12.2 Use the Information Below for the Following Problem(S)

question 53

Multiple Choice

Exhibit 12.2
Use the Information Below for the Following Problem(S)
Assume that the dividend payout ratio will be 75 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 12.2.What is the expected sustainable growth rate?

• A) 9.0%
• B) 7.2%
• C) 6.0%
• D) 3.0%
• E) 3.6%

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Definitions:

Drinks

Drinks refer to liquids that are consumed, which can include a variety of beverages such as water, soda, tea, coffee, and alcohol.

Mobile Phone

A portable telephone that can make and receive calls over a radio frequency while moving around a wide geographic area.

Text And Email

Forms of digital communication where text messages are sent over cellular networks and emails are exchanged through internet services.

Etiquette

A conventional etiquette observed by people within society or specific groups to maintain polite interaction.