A company has a dividend payout ratio of 35 percent.If the company's return on equity is 15 percent,what is the expected growth rate if no new outside financing is used?
A) 4.50%
B) 5.25%
C) 7.75%
D) 8.25%
E) 9.75%

Name: A company has a dividend payout ratio of 35 percent.If the company's return on equity is 15 percent,what is the expected growth rate if no new outside financing is used? A) 4.50% B) 5.25% C) 7.75% D) 8.25% E) 9.75%
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Question

Quizplus · Accepted Answer

g = RR(ROE)= (1 - .35)(.15)= 0.0975 or 9.75%

A Company Has a Dividend Payout Ratio of 35 Percent