Question
The Double Obelisk Resort expects an earnings per share of $9 in the coming year. Investors require a 20% required rate of return. The Royal
The Double Obelisk Resort expects an earnings per share of $9 in the coming year. Investors require a 20% required rate of return. The Royal Ridge Resort expect to grow in the future and, therefore, wants to retain 45% of its future earnings (this retention will remain constant in the future). These earnings can be reinvested, bearing 17 percent return on equity (this expected return on equity will remain unchanged in the future). Based on this information, the dividend paid by the Double Obelisk Resort equals to:
A. $4.05
B. $4.95
C. $9.00
D. $1.53
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