USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 135

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Assume that the dividend payout ratio will be 75 percent when the rate on long-term government bonds falls to 8 percent. Because investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 15 percent return. The return on equity will be 12 percent.
-Refer to Exhibit 9.2. To what price will the market rise if the earnings expectation is $32.00?

• A) $384.00
• B) $266.56
• C) $213.44
• D) $200.00
• E) $125.44

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Definitions:

Lost Sales

Potential sales that were not realized due to stockouts, capacity issues, or other operational constraints.

Order Policy

Order Policy includes the rules or strategies a company uses to determine when and how much inventory to reorder.

Single-channel

Refers to a service or communication pathway that involves only one method or medium for customer interaction or data transmission.