a firm has assets of $100,000 equity of $76,000 and net income of $19,000. they pay...
a firm has assets of $100,000 equity of $76,000 and net income of $19,000. they pay of dividends of $5,700. if these relationships remain constant, at what rate can this firm grow using only internally generated cash flow(they will not borrow and will not issue new stock)
Homework Answers
g = ROE * (1 - Dividend payout ratio)
ROE = Net Income / Equity
Dividend Payout Ratio = Dividend/Net Income
g = 19,000/76,000 * (1 - 5,700/76,000)
g = 0.23125
g = 23.125%
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