Kirkevue Industries Pays Out All Its Earnings as Dividends and Has

question 51

Multiple Choice

Kirkevue Industries pays out all its earnings as dividends and has a share price of $24.In order to expand,Kirkevue announces it will cut its dividend payments from $2.00 to $1.80 per share and reinvest the retained funds.What is the growth rate that should be achieved on the reinvested funds to keep the equity cost of capital unchanged?

• A)0.83%
• B)15.33%
• C)18.23%
• D)17.97%

---

Definitions:

Affective

Relating to moods, feelings, and attitudes; it denotes the emotional aspect of consciousness.

Behavioral

Pertaining to the actions or reactions of a person or animal in response to external or internal stimuli.

Stereotypes

Oversimplified generalizations about groups of people that often underlie prejudice and discrimination.

Cognitions

Mental processes involved in gaining knowledge and comprehension, including thinking, knowing, remembering, judging, and problem-solving.