What Effect on the Growth Rate of Earnings Can Be

question 32

Multiple Choice

What effect on the growth rate of earnings can be accomplished by decreasing the dividend-payout ratio from 70 percent to 40 percent if the firm has an ROE of 20 percent?

• A)The growth rate can increase from 6 percent to 10.5 percent
• B)The growth rate can increase from 6 percent to 12 percent
• C)The growth rate can increase from 8 percent to 14 percent
• D)The growth rate can increase from 11 percent to 14 percent current growth rate in earnings = plowback ratio x ROE
• = )3 x .2 = 6%

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Economists who advocate for the reduction of barriers to international trade, such as tariffs and quotas, to promote economic efficiency and consumer choice worldwide.

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