One can estimate the dividend growth rate for a stable firm as
A)plow-back rate/the return on equity (ROE).
B)plow-back rate - the return on equity (ROE).
C)plow-back rate + the return on equity (ROE).
D)plow-back rate × the return on equity (ROE).

Question

Quizplus · Accepted Answer

The dividend growth rate for a stable firm can be estimated by multiplying the plow-back rate (the proportion of earnings retained by the firm) by the return on equity (ROE). This reflects the reinvestment of earnings at the firm's ROE, leading to growth.

One Can Estimate the Dividend Growth Rate for a Stable