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River Co Has Paid a Dividend $2 Per Share Out of of Earnings

Question 8

Multiple Choice

River Co. has paid a dividend $2 per share out of earnings of $4 per share. If the book value per share is $25 and is currently selling for $40 per share, calculate the required rate of return on the stock.


A) 15.2%
B) 7.2%
C) 14.7%
D) 13.4%

Correct Answer:

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