Kirkevue Industries Pays Out All Its Earnings as Dividends and Has

question 103

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%
• E)12.35%

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