Question #123
Reading: Reading 20 Discounted Dividend Valuation
PDF File: Reading 20 Discounted Dividend Valuation.pdf
Page: 49
Status: Unattempted
Question
Supergro has current dividends of $1, current earnings of $3, and a return on equity of 16%, what is its sustainable growth rate?
Answer Choices:
A. 12.2%
B. 10.7%
C. 8.9%
Explanation
g = (1 – 1/3)(0.16) = 0.107