High Tech Chip Company Is Expected to Have EPS in the Coming

question 34

Multiple Choice

High Tech Chip Company is expected to have EPS in the coming year of $2.50. The expected ROE is 12.5%. An appropriate required return on the stock is 11%. If the firm has a plowback ratio of 70%, the growth rate of dividends should be

• A) 5.00%.
• B) 6.25%.
• C) 6.60%.
• D) 7.50%.
• E) 8.75%.

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Definitions:

Analyzed

Examined carefully and in detail so as to identify causes, key factors, possible results, etc.

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The process of presenting data or information in a condensed form, highlighting key findings or patterns.

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