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

question 69

Multiple Choice

Given the information below,calculate the expected growth rate (g) of dividends,using the constant growth model P₀ =
,
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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