Stockholders of Dogs R Us Pet Supply expect a 12% rate of return on their stock. Management has consistently been generating an

Question

3 years ago

11

Stockholders of Dogs R Us Pet Supply expect a 12% rate of return on their stock. Management has consistently been generating an

ROE of 15% over the last 5 years but now believes that ROE will be 12% for the next 5 years. Given this, the firm's optimal dividend payout ratio is now ______.

Business

1 answer:

alexandr402 [8] · Answer 1 · 2022-09-08T11:54:05+03:00

Answer:

100%

Explanation:

Stockholders of Dog's R Us Pet Supply expect a 12% rate of return on their stock. Management has consistently been generating a ROE of 15% over the last 5 years but now believes that ROE will be 12% for the next five years. Given this the firm's optimal dividend payout ratio is now 100%