Red Acre Industries paid a dividend of $0.63 per share after having earnings of $2.45, and...
Red Acre Industries paid a dividend of $0.63 per share after having earnings of $2.45, and has an ROE of 8 percent. What is Red Acre Industries' payout ratio? retention ratio? expected growth rate? please show steps, it would be helpful to me. thanks!
Homework Answers
payout ratio=Dividend/earnings
=(0.63/2.45)=0.2571(or 25.71% approx).
Retention ratio=1-payout ratio
=(1-0.2571)=0.7429(or 74.29% approx).
Growth rate=ROE*Retention ratio
=(0.08*0.7429)=5.94%(Approx).
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