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Suppose a firm has 3 billion shares outstanding and just reported a net income of $1.5 billion. The firm expects to maintain a dividend payout
Suppose a firm has 3 billion shares outstanding and just reported a net income of $1.5 billion. The firm expects to maintain a dividend payout ratio of 40 percent on its earnings. If the firms price-earnings ratio is 20, its leverage ratio is 4 and its return on equity is 7 percent, what is its required rate of return (Kc) on equity?
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