(solution) 3. (TCO A) If net income, total assets, and book value of equity

(solution) 3. (TCO A) If net income, total assets, and book value of equity

3. (TCO A) If net income, total assets, and book value of equity stayed the same, what would be the effect on the DuPont Identity of an increase in sales? (Points : 20)

4. (TCO D) A stock pays an annual dividend of $2.50 and that dividend is not expected to change. Similar stocks pay a return of 10%. What is P0? (Show workings) (Points : 20)

5. (TCO D) A stock has just declared an annual dividend of $2.25 to be paid one year from today. The dividend is expected to grow at a 7% annual rate. The return on equity for similar stocks is 12%. What is P0? (Show workings) (Points : 20)

3. (TCO A) If net income, total assets, and book value of equity stayed the same, what
would be the effect on the DuPont Identity of an increase in sales? (Points: 20)
Answer:
Decomposition of ROE…