You expect that KT Industries (KTI)will have earnings per share of $3 this year and that they will pay out $1.50 of these earnings to shareholders in the form of a dividend.KTI's return on new investments is 15% and their equity cost of capital is 12%.The expected growth rate for KTI's dividends is closest to:

Question

Quizplus · Accepted Answer

B) g = retention rate × return on new investment
= (3.00 - 1.50) / 3.00 × .15 = .075 or 7.5%

You Expect That KT Industries (KTI)will Have Earnings Per Share