The newspaper reported last week that Bennington Enterprises earned $34.09 million this year. The report also...
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The newspaper reported last week that Bennington Enterprises earned $34.09 million this year. The report also stated that the firm’s return on equity is 18 percent. The firm retains 70 percent of its earnings. |
| What is the firm's earnings growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| What will next year's earnings be? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) |
Homework Answers
a) Growth rate g = ROE * Retention ratio
g = 18% * 70%
g = 12.60%
b) E1 = E0 * (1 + g)
E1 = $34,090,000 * (1 + 12.60%)
E1 = $38,385,340
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