C is correct because it is based on the sustainable growth rate and the required
rate of return:
Sustainable growth rate = (b in mature phase) × (Return on equity)
= (1 – Dividend payout) × (Return on equity)
0.036 = (1 – Dividend payout) × 0.083
Solving for the dividend payout ratio, the dividend payout = 56.627% ≈ 56.6%.
