Acme Consolidated Has a Return on Equity of 12

question 33

Multiple Choice

Acme Consolidated has a return on equity of 12%. If Acme distributes 60% of earnings as dividends, then we would expect the common shareholders' investment in the firm and the value of the common stock to grow by

• A) 4.80%.
• B) 7.20%.
• C) 12%.
• D) 6%.