You anticipate that Liebendauer Enterprises (ticker: LBE) will have earnings per share of

$5

this year. Furthermore, you expect that they will pay out

$1.00

of these earnings to shareholders in the form of a dividend at the end of this year. You estimate that LBE's return on new investments is

16%

and their equity cost of capital is

12%.

Your expected growth rate for LBE's dividends will be closest to:

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Part 1

A.

7.7%

B.

12.8%

C.

5.1%

D.

9.6%