Low Tech Company Has an Expected ROE of 10

question 30

Multiple Choice

Low Tech Company has an expected ROE of 10%.The dividend growth rate will be ________ if the firm follows a policy of paying 40% of earnings in the form of dividends.

• A)6.0%
• B)4.8%
• C)7.2%
• D)3.0%
• E)none of the above

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Definitions:

Computed

Refers to the result obtained after performing a mathematical calculation or processing data using a computer.

Taxpayer Report

An official document or filing that a taxpayer submits to the tax authorities detailing income, expenses, and other relevant tax information.

Interest Income

Earnings on various types of investments that pay interest, such as savings accounts, CDs, and bonds.

OID Instrument

OID Instrument stands for Original Issue Discount Instrument, which is a debt instrument issued at a price lower than its face value, with the difference being the implied interest paid over the term of the instrument.