Financial Accounting Question please answer The corporation has earnings of $2.50 per share and paysout $0.50 per share in dividends. The Return-on-Equity(ROE) is 18 and has a PE ratio of 14.What is the annual growth rate of this company?a. 14.40%b. 11.20%c. 3.60%d. 2.80%

Step 1: Define Sustainable Growth Rate (SGR)The sustainable growth rate indicates the maximum growth…

Answered: The corporation has earnings of $2.50…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 6P

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Company Systema estimates their required rate of return on average to be 10%. Last year’s dividend was $4 and the current share price of the company is $106. Find the estimated growth rate of dividend for Systema.

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The corporation has earnings of $2.50 per share and pays out $0.50 per share in dividends. The Return-on-Equity (ROE) is 18 and has a PE ratio of 14. What is the annual growth rate of this company? a. 14.40% b. 11.20% c. 3.60% d. 2.80%