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
Correct Answer:
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