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Question 25 Stock IAMs required rate of return is 10 percent annually and its return on equity is 12 percent annually. Its d
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Answer #1

Growth Rate = Return on Equity * Retention Ratio

Retention Ratio = 100% - Dividend Payout Ratio

= 100% - 60%

= 40%

Growth Rate = 12% * 40%

= 4.8%

Option C is correct.

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