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14. Foundation Inc. currently has a return on equity (ROE) equal to 24%, a required return on equity (re) equal to 12% and a dividend payout ratio of 60% leading to a forward PE ratio of 25 and a PB ratio of 6. What would be the company's PB ratio if they reduce their dividend payout ratio to 55% in perpetuity? Options  a. 9 b. 11 c. 4 d. 6

14. Foundation Inc. currently has a return on equity (ROE) equal to 24%, a required return on equity (re) equal to 12% and a dividend payout ratio of 60% leading to a forward PE ratio of 25 and a PB ratio of 6. What would be the company's PB ratio if they reduce their dividend payout ratio to 55% in perpetuity? Options  a. 9 b. 11 c. 4 d. 6

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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14. Foundation Inc. currently has a return on equity (ROE) equal to 24%, a required return on equity (re) equal to 12% and a dividend payout ratio of 60% leading to a forward PE ratio of 25 and a PB ratio of 6. What would be the company's PB ratio if they reduce their dividend payout ratio to 55% in perpetuity?

Options 

a. 9
b. 11
c. 4
d. 6
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