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:

Cerebral Cortex

The outer layer of the brain involved in complex functions such as thought, perception, memory, and decision-making.

Advanced Thinking

A cognitive process characterized by the ability to understand complex concepts, solve problems in new ways, and think critically about various subjects.

Sexual Drive

The natural or instinctive physiological desire for sexual activity or expressions.

Theory

Set of assumptions about the likely causes of abnormality and appropriate treatments.