Nails and More has net income of $11,200,total equity of $56,400,a dividend payout ratio of 60 percent,and an equity multiplier of 1.25.What is the internal rate of growth?
A)11.91%
B)8.63%
C)8.01%
D)5.54%
E)6.79%

Question

Quizplus · Accepted Answer

ROA = $11,200/(1.25 × $56,400)= .1589Internal growth rate = [.1589 × (1 - .60)]/{1 - [.1589 × (1 - .60)]} = .0679,or 6.79%

Nails and More Has Net Income of $11,200,total Equity of $56,400,a