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%

Recognize the strategic purposes and outcomes of tender offers and hostile takeovers.

Understand the implications of corporate restructuring for company liabilities and legal actions against the corporation.

Identify the regulatory and shareholder approval requirements for different types of corporate restructuring.

Know the effects of corporate restructuring on stock value and how appraisal rights work.

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Definitions:

Psychogenic Needs

are psychological desires or motivations that drive individual behaviors, often subconscious in nature.

Expectancy Theories

A group of theories that explain how people determine the likelihood of a specific outcome based on their actions, beliefs about their abilities, and the perceived likelihood of achieving their goal.

Need For Power

An individual's desire to control or influence others.

Personal Accomplishment

A feeling of pride or fulfillment resulting from achieving something through one's own efforts or skills.