Nails and More has net income of $13,100,total equity of $86,000,a dividend payout ratio of 25 percent,and an equity multiplier of 1.4.What is the internal rate of growth?
A)4.03%
B)4.63%
C)8.01%
D)3.54%
E)8.89%

Question

Quizplus · Accepted Answer

ROA = $13,100 / (1.4 × $86,000)= 0.1088 Internal growth rate = [0.1088 × (1 - 0.25)] / {1 - [0.1465 × (1 - 0.25)]} = 0.0889,or 8.89%

Nails and More Has Net Income of $13,100,total Equity of $86,000,a