Gagliardi Way Corporation has an expected ROE of 15%.If it pays out 30% of it earnings as dividends,its dividend growth rate will be _____.

Name: Gagliardi Way Corporation has an expected ROE of 15%.If it pays out 30% of it earnings as dividends,its dividend growth rate will be _____.
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Question

Quizplus · Accepted Answer

The dividend growth rate can be calculated using the formula: 
Dividend growth rate = (1 - Payout ratio) x Return on Equity 
= (1 - 0.30) x 0.15 
= 0.105 or 10.5% 
Therefore, the correct answer is B.

Gagliardi Way Corporation Has an Expected ROE of 15