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Crane Inc. currently only returns cash to its investors in the form of dividends. It pays...

Crane Inc. currently only returns cash to its investors in the form of dividends. It pays out 39% of its earnings per share. The return on new investment for Crane is 18.7%. Given this information, estimate the growth rate for the future dividends of Crane. Express your result in percent and round to two decimals (do not include the %-symbol in your answer).

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Expert Solution

Growth rate = Rate of return on investment * (1 – Dividend payout ratio)

Growth rate = 0.187 * (1 - 0.39)

Growth rate = 0.1141 or 11.41%

jeff jeffy answered 2 years ago
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