If the wage rate increases from $12 to $13 and, as a result, the quantity demanded of labor decreases from 400 workers to 380 wo
2 answers:
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Answer: The dividend payout ratio is 46.19%.
We follow these steps in order to arrive at the answer:
We begin with the DuPont identity of RoE.
<u>DuPont Identity:</u>
Now,
And Debt Ratio is also expressed as:
where D/E represents the Debt-Equity Ratio.
Substituting the value of D/E ratio from the question in the debt ratio formula above we get,
----(1)
Substituting (1) in the equity multiplier formula above we get,
Substituting Equity Multiplier from above and the relevant numbers from the question in the DuPont identity we get,
The relationship between RoE and earnings growth rate g is given by the following formula:
, where p is the dividend payout ratio.
Plugging in the values in the formula above we get,
p = 0.461988304 or 46.19%
Answer:
risk free rate of return is = 11.37 %
Explanation:
given data
K expected rate of return = 13%
K standard deviation = 19% = 0.19
L expected rate of return = 10%
L standard deviation = 16% = 0.16
to find out
risk-free portfolio rate of return
solution
first we find here weight of each portfolio
weight of K = ..................1
weight of K =
weight of K = 0.4571 = 45.71%
and
weight of L = 1 - 0.4571
weight of L = 0.5428 = 54.28 %
so that
risk free rate will be here
risk free rate = ( weight of K × K expected rate of return ) + ( weight of L + L expected rate of return ) ..........................2
risk free rate = ( 45.71 % × 13 % ) + ( 54.28 % + 10% )
risk free rate = 11.37 %