Internal growth rate: Mandolin Bottlers has profit of $4,272,335 and retains 65 per cent of its income every year. If the company's internal growth rate is 8.6 per cent, what is the company's total assets?

Question

Quizplus · Accepted Answer

The correct answer is A.The internal growth rate is calculated as the percentage of retained earnings divided by the total assets. In this case, the internal growth rate is 8.6%, and the retained earnings are 65% of the profit, which is $4,272,335 * 0.65 = $2,784,518. Therefore, the total assets are $2,784,518 / 0.086 = $32,290,904.

Internal Growth Rate: Mandolin Bottlers Has Profit of $4,272,335 and Retains