A firm has a return on equity of 20% and a dividend-payout ratio of 30%. The firm's anticipated growth rate is
A) 6%.
B) 10%.
C) 14%.
D) 20%.

Name: A firm has a return on equity of 20% and a dividend-payout ratio of 30%. The firm's anticipated growth rate is A) 6%. B) 10%. C) 14%. D) 20%.
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Question

Quizplus · Accepted Answer

The growth rate can be calculated using the formula: Growth Rate = Return on Equity * (1 - Dividend Payout Ratio). Here, it is 20% * (1 - 0.30) = 20% * 0.70 = 14%.

A Firm Has a Return on Equity of 20% and a Dividend-Payout