19. HoosierMart earns a profit and it adopts a dividend payout ratio of 30%. It has...
19. HoosierMart earns a profit and it adopts a dividend payout ratio of 30%. It has no plan on issuing additional stocks (equity shares) or bonds (long-term debt) at this time. Thus, ______________ is the maximum rate at which it can currently grow.
| A | internal growth rate (1 − .30) |
| B | sustainable growth rate (1 − .30) |
| C | internal growth rate |
| D | sustainable growth rate |
| E | zero percent |
Homework Answers
When no new equity or debt is issued, we find internal growth rate, which implies how much growth can be achieved from internal sources.
So correct answer is internal growth rate.
formula for internal growth rate = (ROA X b)/(1-(ROA X b))
ANSWER : C : Internal growth rate (thumbs up please)
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