Kurt's Bikes Has Net Income of $86,000 and Total Equity

question 99

Multiple Choice

Kurt's Bikes has net income of $86,000 and total equity of $620,000. The debt-equity ratio is.2 and the plowback ratio is 80 percent. What is the internal growth rate?

• A) 9.68 %
• B) 9.89%
• C) 10.19%
• D) 12.29%
• E) 12.48 %

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Definitions:

Warranty Liability

Liability attributed when the transfer of an instrument breaches a warranty associated with an instrument.

Good Faith

The honest intention to act without taking an unfair advantage over another party in a transaction.

Reasonable Commercial Standards

The accepted norms and practices within a particular industry or trade that are considered to be fair and appropriate.

Demand Instrument

A demand instrument is a financial document that requires payment of a specified sum of money immediately upon demand or within a short time frame.