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

question 114

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.Starting with the initial conditions,you expect the retention ratio to be constant,the rate of inflation to increase by 2 percent,and the growth rate to increase by 1 percent.What is the expected P/E?

• A) 4.44
• B) 5.00
• C) 5.71
• D) 6.67
• E) 8.00

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Definitions:

Royal Tombs

Burial sites or mausoleums built for members of a royal family, often elaborate and richly decorated to signify their status.

Old Kingdom

A period in ancient Egyptian history characterized by the construction of the Pyramid of Giza and the development of a centralized government, roughly spanning 2686-2181 BCE.

Early Dynastic

Refers to the initial periods of a civilization's history marked by the formation of the first centralized states, dynasties, or kingdoms, such as in ancient Egypt and Mesopotamia.

Palette

A thin board with a thumb hole at one end on which an artist lays and mixes colors; any surface so used. Also, the colors or kinds of colors characteristically used by an artist. In ancient Egypt, a slate slab used for preparing makeup.