Exhibit 12.3 Use the Information Below for the Following Problem(S)

question 118

Multiple Choice

Exhibit 12.3
Use the Information Below for the Following Problem(S)
Assume that the dividend payout ratio will be 55 percent when the rate on long-term government bonds falls to 9 percent. Since investors are becoming more risk averse, the equity risk premium will rise to 8 percent and investors will require a 7 percent return. The return on equity will be 13 percent.
-Refer to Exhibit 12.3.To what price will the market rise if the earnings expectation is $1.5?

• A) $138.42
• B) $90.36
• C) $71.74
• D) $105.30
• E) $85.14

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Definitions:

Certified Internal Auditor

A certification for accountants who conduct internal audits, ensuring a company's financial operations and records adhere to laws, regulations, and standards.

Van Purchase

Refers to the acquisition of a van, categorized as a fixed asset, involving cash or credit transaction.

Financial Statements

Official documentation of a company, individual, or entity's financial transactions and status, usually comprising the income statement, balance sheet, and statement of cash flows.

Internal Accounting Staff

Employees within an organization responsible for overseeing and managing financial records and transactions.