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Given the Information Below, Calculate the Expected Growth Rate (G)

question 37

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Given the information below, calculate the expected growth rate (g) of dividends, using the constant growth model Given the information below, calculate the expected growth rate (g) of dividends, using the constant growth model Beta = 1.75; r<sub>RF</sub> = 7 percent; r<sub>M</sub> = 11 percent; dividend payout ratio = 30 percent; r<sub>d</sub> = 10 percent (paid) on all long-term debt; P/E ratio = 10; sales = 5,000 units; sales price per unit = $5; variable cost per unit = $2; fixed cost = $1,000; common stock shares outstanding = 5,000; long-term debt outstanding = $10,000; tax rate = 40 percent.Assume equilibrium exists in the market. A) 11.34% B) 6.54% C) 11.0% D) 10.68% E) 10.19% Beta = 1.75; rRF = 7 percent; rM = 11 percent; dividend payout ratio = 30 percent; rd = 10 percent (paid) on all long-term debt; P/E ratio = 10; sales = 5,000 units; sales price per unit = $5; variable cost per unit = $2; fixed cost = $1,000; common stock shares outstanding = 5,000; long-term debt outstanding = $10,000; tax rate = 40 percent.Assume equilibrium exists in the market.

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