A Firm Has ROA of 20%,ROE of 25%,and a Payout

question 54

Multiple Choice

A firm has ROA of 20%,ROE of 25%,and a payout ratio of 30%.What is the firm's internal growth rate?

• A)5%
• B)14%
• C)17.5%
• D)6%
• E)7.5%

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Definitions:

Canadian Bill

A short-term government security issued by the Canadian government, similar to treasury bills in the United States.

Stock Index

A statistical measure that tracks the performance of a specific basket of stocks, representing a particular market or a segment of it.

Correlations

A statistical measure that indicates the extent to which two or more variables fluctuate in relation to each other.

ADRs

American Depository Receipts (ADRs) are a type of negotiable security that represents shares in a foreign company and is traded on a local stock exchange but represents a specified number of shares in a foreign corporation.