Harvey Co. has net income of $170,000, total equity of $850,000, a dividend payout ratio of 50 percent, and an equity multiplier of 1.40. What is the internal rate of growth?
7.69% |
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7.81% |
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8.02% |
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8.24% |
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8.47% |
ROA = $170,000/$850,000×1.40 = 14.2857%
Internal growth rate = ROA×Retention ratio÷(1-ROA×Retention ratio)
= 14.2857%×50%÷(1-14.2857%×50%)
= 7.69%
Hence, correct option is 7.69%
Harvey Co. has net income of $170,000, total equity of $850,000, a dividend payout ratio of...
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