Stone Cold Incorporated reported net income of $10 million for 2003.In addition,shareholder equity for the firm was $80 million at the end of 2003.The company was able to pay $3 million out as dividends to the shareholders for 2003.After 2003,excess paid-in-capital was $60 million.Given this information,what is the growth rate available for Stone Cold?

Question

Quizplus · Accepted Answer

ROE = $10/$80 = .125
rr = 1 - ($3/$10)= .70
Growth = .7*.125

Stone Cold Incorporated Reported Net Income of $10 Million for 2003.In