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NEW QUESTION: 1
Given the following information, what would the expected industry rate of return equal?
Dividend payout= 30%
Net earnings estimate= $12.62/share
Multiple estimate= 19
Current earnings index= 225.50
A. 8.0%
B. 7.5%
C. 10.0%
D. 8.5%
E. 9.0%
Answer: A
Explanation:
Explanation/Reference:
Explanation:
Expected industry return = (Index estimate - Current index + Dividend) / Current index = (239.78 - 225.50 +
$3.79) / 225.50 = 8.0%
Index estimate = $12.62 x 19 = 239.78
Dividend = .30 x $12.62 = $3.79

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