Acme Consolidated has a return on equity of 12%.If Acme distributes 60% of earnings as dividends, then we would expect the common shareholders' investment in the firm and the value of the ordinary shares to grow by

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The correct answer is A.Acme Consolidated has a return on equity of 12%. If Acme distributes 60% of earnings as dividends, then the common shareholders' investment in the firm and the value of the ordinary shares to grow by 4.80%. This is because the retained earnings, which are the earnings that are not distributed as dividends, will be reinvested in the firm and will generate a return of 12%. This will cause the value of the ordinary shares to grow by 4.80%.

Acme Consolidated Has a Return on Equity of 12