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:

One-Child Pledge

A policy or agreement to limit families to only one child, often to control population growth.

Demographic Transition

The transition from high birth and death rates to low birth and death rates as a country develops from a pre-industrial to an industrialized economic system.

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The monetary resources owned or available to individuals, companies, or countries for investment in wealth-generating assets.

Developing Countries

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