Asked by Khristy Ramirez on Jun 04, 2024

verifed

Verified

Brevik Builders has an expected ROE of 25%. Its dividend growth rate will be ________ if it follows a policy of paying 30% of earnings in the form of dividends.

A) 5%
B) 15%
C) 17.5%
D) 45%

Dividend Growth Rate

The annualized percentage rate of growth of a company's dividend payments, indicating how quickly the dividend payments have grown over a specific period.

Expected ROE

The anticipated return on equity, calculated based on expected future earnings divided by shareholders' equity.

  • Examine the influence of changes in dividend policy on stock prices and investor profitability.
verifed

Verified Answer

MS
Mary Salve DolorJun 09, 2024
Final Answer :
C
Explanation :
g = 0.25(1 − 0.3) = 0.175