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

question 37

Multiple Choice

Given the information below, calculate the expected growth rate (g) of dividends, using the constant growth model Beta = 1.75; r_RF = 7 percent; r_M = 11 percent; dividend payout ratio = 30 percent; r_d = 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%

---

Definitions:

Self-actualization

The achievement or satisfaction of an individual's talents and capacities, seen as an innate desire or necessity in each person.

Security

Measures or protocols taken to protect against threats, harm, theft, or other malicious actions.

Defence Mechanisms

Psychological strategies used unconsciously by individuals to protect themselves from anxiety and to manage emotional conflict and internal or external stressors.

Unconscious Conflict

A term in psychoanalytic theory referring to a struggle or clash between different impulses, desires, or aspects of the unconscious mind.