Given the Information Below,calculate the Expected Growth Rate (G)of Dividends,using

question 79

Multiple Choice

Given the information below,calculate the expected growth rate (g) of dividends,using the constant growth model Beta = 1.75;r_RF = 7 percent;r_M = 11 percent;dividend payout ratio = 30 percent;r_d = 10 percent (paid) on all long-term debt;P/E ratio = 10;sales = 5,000 units;sales price per unit = $5;variable cost per unit = $2;fixed cost = $1,000;common stock shares outstanding = 5,000;long-term debt outstanding = $10,000;tax rate = 40 percent.Assume equilibrium exists in the market.

• A) 11.34%
• B) 6.54%
• C) 11.0%
• D) 10.68%
• E) 10.19%

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Definitions:

Merchants

Businesses or individuals engaged in the sale of goods, particularly in a specialized market.

Communication

In a contract, an offer made to the offeree or the offeree’s agent.

Consumer Lease

is a contract where an individual leases goods for personal, family, or household purposes for a set period of time.

Personal Use

The use of a product, service, or property for an individual's private and non-commercial purposes.