Lory Company Had Net Earnings of $127,000 This Past Year

question 37

Multiple Choice

Lory Company had net earnings of $127,000 this past year of which $46,200 was paid out in dividends.The company's equity was $1,587,500.Lory has 200,000 shares outstanding with a current market price of $11.63 per share.Both the number of shares and the dividend payout ratio are constant.What is the required rate of return if the growth rate is 5.6 percent?

• A)8.42 percent
• B)6.67 percent
• C)7.70 percent
• D)7.39 percent
• E)8.24 percent