权益

问题如下：

Question

An analyst collects the following data on a company:

Using a required return of 12.4%, if the company increases its dividend payout ratio to 40%, the justified forward P/E ratio will be closest to:

选项：

A.11.5. B.7.7. C.5.3.

解释：

Solution

B is correct.

Dividend growth rate = (1 – Payout ratio) × ROE

Justified forward P/E: P₀/E₁ = p/(r – g), where p = Payout ratio.

Using the new payout ratios, the justified forward P/E ratios, are calculated:

New dividend growth rate = (1 – 0.4) × 12% = 7.2%;

New justified forward P/E = 0.4/(0.124 – 0.072) = 7.7×.

C is incorrect. It uses wrong dividend growth rate by taking a product of payout ratio and ROE.

New dividend growth rate = (0.4) × 12% = 4.8%;

New Justified forward P/E = 0.4/(0.124 – 0.048) = 5.3×

A is incorrect. It uses payout ratio instead of retention rate to calculate new justified P/E ratio.

New dividend growth rate = (1 – 0.4) × 12% = 7.2%;

New justified forward P/E = (1 – 0.4)/(0.124 – 0.072) = 11.5×