Which of the following statements is FALSE?
A. Cutting the firm's dividend to increase investment will raise the stock price if, and only if, the return of new investments is higher than the cost of capital.
B. We cannot use the constant dividend growth model to value the stock of a firm with rapid or changing growth.
C. Total return equals earnings multiplied by the dividend payout rate.
D. As firms mature, their earnings exceed their investment needs and they begin to pay dividends.

Total return equals earnings multiplied by the dividend payout rate.

Explanation:

Total return is calculated as appreciation of price plus dividend paid, divided by the original price of the stock.

The income gained on a stock is the increase in its value along with dividend that is paid out. This is compared to the original price (denominator) to determine how much returns is realised on the stock.

Mathematically

Returns= {(New price- Old price) + Dividend} ÷ Old price

So the statement total return equals earnings multiplied by the dividend payout rate is false

answer; charters;