Asked by Clarise Gindap on May 03, 2024
Verified
Rose Hill Trading Company is expected to have EPS in the upcoming year of $8. The expected ROE is 18%. An appropriate required return on the stock is 14%. If the firm has a plowback ratio of 70%, its dividend in the upcoming year should be ________.
A) $1.12
B) $1.44
C) $2.40
D) $5.60
Plowback Ratio
The proportion of earnings retained by a company after dividends have been paid out, indicating the level of reinvestment in the business.
Required Return
The minimum expected return an investor demands for holding a particularly risky investment.
- Scrutinize the repercussions of dividend policy reforms on the appraisal of stocks and the dividends received by investors.
Verified Answer
ZK
Learning Objectives
- Scrutinize the repercussions of dividend policy reforms on the appraisal of stocks and the dividends received by investors.