Exhibit 12.9 Use the Information Below for the Following Problem(S)

question 86

Multiple Choice

Exhibit 12.9
Use the Information Below for the Following Problem(S)
The aggregate market currently has a retention ratio of 60 percent, a required rate of return of 12 percent, and an expected growth rate for dividends of 4 percent.
-Refer to Exhibit 12.9.If the payout ratio changes to 50 percent,but there are no other changes,what will be the new P/E?

• A) 3.25
• B) 4.16
• C) 5.75
• D) 6.25
• E) 7.67

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Definitions:

Interval

A range of numbers between two set points.

Real Number Line

A one-dimensional line on which every point corresponds to a real number and every real number to a point.

Real Number Line

A line that graphically represents all possible real numbers, where each point on the line corresponds to a unique real number.

Inequality

An inequality is a mathematical statement indicating that two expressions are not equal, represented by symbols such as > (greater than), < (less than), ≥ (greater than or equal to), or ≤ (less than or equal to).