Undertaker Enterprises earns $0.17 in profit on every $1 of sales and has $0.67 in assets for every $1 of sales.The firm pays out 20 percent of its profits to its shareholders.What is the internal growth rate?
A)6.37 percent
B)7.76 percent
C)8.80 percent
D)25.47 percent
E)29.65 percent

Question

Quizplus · Accepted Answer

Internal growth rate = [($0.17/$0.67) × (1 - 0.20)]/{1 - [($0.17/$0.67) × (1 - 0.20)]} = 25.47 percent

Undertaker Enterprises Earns $0