Cambria, Inc., had equity of $164363 at the beginning of the year. At the end of...
Cambria, Inc., had equity of $164363 at the beginning of the year. At the end of the year, the company had total assets of $353016. During the year the company sold no new equity. Net income for the year was $38326 and dividends were $9187.
What is the internal growth rate for the company? (in %)
(Enter your answer as a percentage, omit the "%" sign in your response, and round your answer to 4 decimal places. For example, 1.23456% should be entered as 1.2346)
Homework Answers
Return on Assets = Net Income / Total Assets
= $ 38,326 / $ 353,016
= 10.85673171%
= 0.1085673171
Retention Ratio= ( Net income - Dividends Paid ) / Net income * 100
= ( $ 38,326 - $ 9,187) / $ 38,326
= 76.02932735%
= 0.7602932735
Internal Growth Rate = ( Return on Assets * Retention Ratio) / [ 1-( Return on Assets * Retention Ratio)]
= ( 0.1085673171 * 0.7602932735) / [ 1 - ( 0.1085673171 * 0.7602932735) ]
= 0.082543 / 0.917456999
= 8.996933925%
Hence the correct answer is 8.9969
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