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USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

Question 116

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The aggregate market currently has a retention ratio of 60 percent, a required rate of return of 12 percent, and an expected growth rate for dividends of 4 percent.
-Refer to Exhibit 9.9. If the payout ratio changes to 50 percent, but there are no other changes, what will be the new P/E?


A) 3.25
B) 4.16
C) 5.75
D) 6.25
E) 7.67

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