What Is the Internal Growth Rate for a Firm with an ROE

question 89

Multiple Choice

What is the internal growth rate for a firm with an ROE of 20%, a dividend payout ratio of 40%, and an equity-debt ratio of 60%?

• A)4.50%
• B)5.39%
• C)8.00%
• D)12.00% internal growth rate = plowback x ROE x equity/assets
• = )6 x .2 x (60/160)
• = )12 x .375

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Definitions:

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The process of adjusting various elements or strategies within an organization so that they are coordinated and support the overall objectives.

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