Question: Apex Financial Ltd is concerned about the impact of errors

Apex Financial Ltd. is concerned about the impact of errors in its estimates of the future dividend payout ratio for Barnett Steel Corporation. Assume that the current dividend is $1, ROE is fixed at 10 percent, and the required rate of return is 15 percent. Using Excel, calculate the current stock price for dividend payout ratios ranging between 5 percent and 75 percent in 5 percentage point increments. Is the percentage change in the stock price for a 5 percentage point change in dividend payout ratio constant?


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  • CreatedFebruary 25, 2015
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