Internal Growth Rate Last year Rain Repel Corporation had an ROA of 5 percent and a dividend payout ratio of 90 percent.What is the internal growth rate?
A)4.75 percent
B)0.50 percent
C)50.00 percent
D)52.63 percent

Question

Quizplus · Accepted Answer

The internal growth rate (IGR) is calculated using the formula: IGR = ROA * (1 - Dividend Payout Ratio). Here, ROA is 5% and the dividend payout ratio is 90%, so IGR = 5% * (1 - 0.90) = 5% * 0.10 = 0.50%.

Internal Growth Rate Last Year Rain Repel Corporation Had an ROA