Lum can finance its capital budget with retained earnings throughout the foreseeable future, and its stock...
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Lum can finance its capital budget with retained earnings throughout the foreseeable future, and its stock price is expected to grow at a constant rate. Lum's expected long-run sustainable return on equity (ROE) is 16%, and the firm expects to maintain its dividend payout ratio of 50%. If Lum uses the DCF approach to calculate its cost of retained earnings, what is the expected dividend yield on Lum's stock? 2.0% 5.0% 4.5% 3.5% 7.7% Lum can finance its capital budget with retained earnings throughout the foreseeable future, and its stock price is expected to grow at a constant rate. Lum's expected long-run sustainable return on equity (ROE) is 16%, and the firm expects to maintain its dividend payout ratio of 50%. If Lum uses the DCF approach to calculate its cost of retained earnings, what is the expected dividend yield on Lum's stock? 2.0% 5.0% 4.5% 3.5% 7.7%
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ROE 16 Dividend Payout Ratio 50 Therefore Retention Rat... View the full answer
Related Book For
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
Posted Date:
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