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NEW QUESTION: 1
A portfolio manager is currently evaluating one of the stocks in the portfolio by looking at the following data:
Current dividend per share: $0.75 Current earnings per share: $1.82 Total NO. of shares outstanding: 22 million Book value of common Equity: $350 million
In particular, what is the best estimate of this particular company's dividend growth rate?
A. 6.7%
B. 4.7%
C. Inconclusive given the data.
Answer: A
Explanation:
Sustainable Growth Rate = ROE ( 1 - Dividend Payout Ratio) = [($1.82 x 22M)/$350M] [1 -
0 .75/1.82] = 6.7%Note: ROE equals total earnings divided by total equity book value.

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NEW QUESTION: 3

A. Option B
B. Option C
C. Option A
D. Option D
Answer: D