The current market price of certain company is £45 per share. The estimated cost of equity of this company is 12%. You have the additional set of information about this company: Expected dividend per share (DPS) for the next year Expected equity book value per share (BPS) for the current year Expected earnings per share (EPS) for the current year £2.1 £20.0 £7.5 The expected payout ratio and return on equity (ROE) of this company, rounded to zero decimals, is:

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
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The current market price of certain company is £45 per share. The estimated cost of equity of this company is 12%. You have the additional set
of information about this company:
Expected dividend per share (DPS) for the next year
Expected equity book value per share (BPS) for the current
year
Expected earnings per share (EPS) for the current year
O a. 21% and 37%, respectively
O b.
The expected payout ratio and return on equity (ROE) of this company, rounded to zero decimals, is:
O C.
O d.
£2.1
26% and 38%, respectively
£20.0
None of the previous answers is correct
£7.5
35% payout ratio and it is not possible to compute the ROE
Transcribed Image Text:The current market price of certain company is £45 per share. The estimated cost of equity of this company is 12%. You have the additional set of information about this company: Expected dividend per share (DPS) for the next year Expected equity book value per share (BPS) for the current year Expected earnings per share (EPS) for the current year O a. 21% and 37%, respectively O b. The expected payout ratio and return on equity (ROE) of this company, rounded to zero decimals, is: O C. O d. £2.1 26% and 38%, respectively £20.0 None of the previous answers is correct £7.5 35% payout ratio and it is not possible to compute the ROE
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