The question is asking for the growth rate of a company given its Dividend Payout (D/P) ratio and Return on Investment (ROI).

The Gordon Growth Model is a simple way to calculate the growth rate (g) of a company. The formula is:

g = ROI - (D/P ratio * ROI)

Given that the D/P ratio is 60% (or 0.60) and the ROI is 16% (or 0.16), we can substitute these values into the formula:

g = 0.16 - (0.60 * 0.16)
g = 0.16 - 0.096
g = 0.064 or 6.4%

So, the growth rate of the company should be 6.4%, which corresponds to option c.

Question

The question is asking for the growth rate of a company given its Dividend Payout (D/P) ratio and Return on Investment (ROI).

The Gordon Growth Model is a simple way to calculate the growth rate (g) of a company. The formula is:

g = ROI - (D/P ratio * ROI)

Given that the D/P ratio is 60% (or 0.60) and the ROI is 16% (or 0.16), we can substitute these values into the formula:

g = 0.16 - (0.60 * 0.16)
g = 0.16 - 0.096
g = 0.064 or 6.4%

So, the growth rate of the company should be 6.4%, which corresponds to option c.

Knowee AI · Accepted Answer

The question is asking for the growth rate of a company given its Dividend Payout (D/P) ratio and Return on Investment (ROI).

The Gordon Growth Model is a simple way to calculate the growth rate (g) of a company. The formula is:

g = ROI - (D/P ratio * ROI)

Given that the D/P ratio is 60% (or 0.60) and the ROI is 16% (or 0.16), we can substitute these values into the formula:

g = 0.16 - (0.60 * 0.16)
g = 0.16 - 0.096
g = 0.064 or 6.4%

So, the growth rate of the company should be 6.4%, which corresponds to option c.

If the company’s D/P ratio is 60% & ROI is 16%, what should be the growth rate:a.5%b.7%c.6.40%d.9.60%