Luther Industries Has a Dividend Yield of 4

question 4

Multiple Choice

Luther Industries has a dividend yield of 4.5% and a cost of equity capital of 12%.Luther Industries' dividends are expected to grow at a constant rate indefinitely.The grow rate of Luther's dividends are closest to:

• A) 7.5%
• B) 5.5%
• C) 16.5%
• D) 12%

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Definitions:

Long-Term Debt

Debt that is due for repayment more than one year into the future.

Equity Securities

Financial assets representing ownership interest in a company, such as stocks, that provide voting rights and potential dividends.

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or rights to ownership (derivatives).

Asset

Any resource owned or controlled by a business or an individual with the expectation that it will provide future economic benefits.