The No-zip Snap Company had net earnings of $127,000 this past year. Dividends were paid of $38,100 on the company's equity of $1,587,500. The estimated growth for No-Zip is:
A) 2.4%
B) 5.6%
C) 7.2%
D) 16.8%

Question

Quizplus · Accepted Answer

The growth rate can be estimated using the formula: Growth = (Net Income - Dividends) / Equity. Here, Growth = ($127,000 - $38,100) / $1,587,500 = $88,900 / $1,587,500 = 5.6%.

The No-Zip Snap Company Had Net Earnings of $127,000 This