Business Analyst MCQ
Equity Valuation
A firm has an expected dividend payout ratio of 60% and an expected future growth rate of7%. What should the firm's fundamental price-to-earnings (P/E) ratio be if the required rate of return on stocks of this type is 15%?
A firm has an expected dividend payout ratio of 60% and an expected future growth rate of7%. What should the firm's fundamental price-to-earnings (P/E) ratio be if the required rate of return on stocks of this type is 15%?
A firm has an expected dividend payout ratio of 60% and an expected future growth rate of7%. What should the firm's fundamental price-to-earnings (P/E) ratio be if the required rate of return on stocks of this type is 15%?
A. 5.0x.
B. 7.5x.
C. lO.Ox.
Answer: B
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