What Is the Return on Equity for a Firm That

question 132

Multiple Choice

What is the return on equity for a firm that has a constant dividend growth rate of 7 percent and a dividend payout ratio of 60 percent?

• A)2.80 percent
• B)4.20 percent
• C)11.67 percent
• D)17.50 percent 7% = ROE x plowback ratio
• = ROE x (1 - .6)
• = ROE x .4

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Definitions:

Direct Labor Cost

The total expense of paying for the labor of employees directly involved in manufacturing a product or delivering a service.

Budgeted Direct Labor Cost

The estimated cost of labor directly involved in the production process, as planned in the budget.

Labor Rate Variance

The difference between the actual cost of direct labor and the estimated cost, indicating how well labor costs were controlled.

Direct Labor-hours

The complete tally of hours that workers, directly involved in making products or providing services, spend working.