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Company ABC has 10 million shares of common stock outstanding. The company reports a net income of $20 million and pays $12 million dividend to sharehoden The company is expected to increase its net income by 4% per year forever and maintain the payout ratio of 60% e, pay out 80% of net income did the required rate of return on the firm's stock is 10%, what must be the stock's priceleamings-to-growth ratio? OA. 10.0 O 8.2.6 OC. 10.4 OD. Not enough informatino to solve this problem. OE.5.2

Company ABC has 10 million shares of common stock outstanding. The company reports a net income of $20 million and pays $12 million dividend to sharehoden The company is expected to increase its net income by 4% per year forever and maintain the payout ratio of 60% e, pay out 80% of net income did the required rate of return on the firm's stock is 10%, what must be the stock's priceleamings-to-growth ratio? OA. 10.0 O 8.2.6 OC. 10.4 OD. Not enough informatino to solve this problem. OE.5.2

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 8P
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Company ABC has 10 million shares of common stock outstanding. The company reports a net income of $20 million and pays $12 million dividend to shareholders The company is expected to increase its net income by 4% per year forever and maintain the payout ratio of 60% (e, pay out 80% of net income as dividend the required rate of return on the firm's stock is 10%, what must be the stock's priceleamings-to-growth ratio? OA. 10.0 8.2.6 OC. 10.4 OD. Not enough informatino to solve this problem. E. 5.2
Transcribed Image Text:Company ABC has 10 million shares of common stock outstanding. The company reports a net income of $20 million and pays $12 million dividend to shareholders The company is expected to increase its net income by 4% per year forever and maintain the payout ratio of 60% (e, pay out 80% of net income as dividend the required rate of return on the firm's stock is 10%, what must be the stock's priceleamings-to-growth ratio? OA. 10.0 8.2.6 OC. 10.4 OD. Not enough informatino to solve this problem. E. 5.2
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