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A Company Is Expected to Maintain a Payout Ratio of 50

Question 16

Multiple Choice

A company is expected to maintain a payout ratio of 50 per cent of earnings. The appropriate discount rate for this risk class is 15 per cent and the expected growth rate in earnings and dividends is 6 per cent. What is the PER?


A) 3.3
B) 5.5
C) 6.6
D) 4.4

Correct Answer:

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