Luther Industries Has a Dividend Yield of 4

question 118

Multiple Choice

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

• A)7.5%
• B)5.5%
• C)16.5%
• D)12%
• E)4.5%

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Definitions:

Periodic Inventory System

A periodic inventory system is a method of inventory valuation where a physical count of inventory is performed at specific intervals to determine the ending inventory balance and the cost of goods sold.

Accounts Payable

Liabilities or amounts owed by a company for goods or services that have been received but not yet paid for.

Periodic System

An inventory accounting system where goods are physically counted at the end of a specific period to determine the cost of goods sold and ending inventory.

Purchases Returns and Allowances

Refers to a reduction in the cost of purchases due to items being returned or allowances provided by the seller for damaged or unsatisfactory goods.