The Florida Diving Company had a return on equity (ROE) of 5% this past year. Dividends were paid of $10,000, and the company's net income was $50,000. If the company has 100,000 shares outstanding with a current market price of $20 per share, what is the required rate of return? a. None of these is right. b. 4.52%. c. 3.60%. d. 6.60%. e. 10.00%.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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What is the required rate of return on this financial accounting question?

The Florida Diving Company had a return on equity (ROE) of 5% this past
year. Dividends were paid of $10,000, and the company's net income
was $50,000. If the company has 100,000 shares outstanding with a
current market price of $20 per share, what is the required rate of return?
a. None of these is right.
b. 4.52%.
c. 3.60%.
d. 6.60%.
e. 10.00%.
Transcribed Image Text:The Florida Diving Company had a return on equity (ROE) of 5% this past year. Dividends were paid of $10,000, and the company's net income was $50,000. If the company has 100,000 shares outstanding with a current market price of $20 per share, what is the required rate of return? a. None of these is right. b. 4.52%. c. 3.60%. d. 6.60%. e. 10.00%.
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