Alibaba Cloud ACP-DevOps Q&A - in .pdf

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NEW QUESTION: 1
Peterson Manufacturing has earnings per share of $4.00 and paid a dividend of $1.00 per share.
Peterson's return on equity is 16.0%. Peterson is considering a debt issue that would increase its financial leverage. Peterson is also considering increasing its dividend payout ratio. Assuming all other factors are constant, Peterson's potential growth rate:
A. will increase due to the increased leverage, and increase further due to the higher payout ratio.
B. will increase due to the higher payout ratio, but this increase will be offset to some extent by the increased leverage.
C. will increase due to the increased leverage, but this increase will be offset to some extent by the higher payout ratio.
Answer: C

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