A Company with a Return on Equity of 15% and a Plowback

question 39

Multiple Choice

A company with a return on equity of 15% and a plowback ratio of 60% would expect a constant-growth rate of:

• A) 4%.
• B) 9%.
• C) 21%.
• D) 25%.

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Definitions:

Separate Corporate Boundaries

A principle that maintains the legal independence between a corporation and its shareholders, protecting personal assets from business liabilities.

Piercing The Corporate Veil

Holding a shareholder responsible for acts of a corporation due to a shareholder’s domination and improper use of the corporation.

Promote Justice

The act of advocating for fair treatment and equal rights within legal, societal, or institutional contexts.

Shareholders

Individuals or entities that own shares in a corporation, making them partial owners and entitling them to potential dividends and certain rights within the corporation.