Mandolin Bottlers Co. has net income of $4,272,335 and retains 65 percent of its income every year. If the company's internal growth rate is 8.6 percent, what are total assets? (Round your answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The internal growth rate formula is given by the retention ratio (b) times the return on assets (ROA), which is net income divided by total assets. We can rearrange this formula to solve for total assets: Total Assets = Net Income / (Internal Growth Rate / Retention Ratio). Plugging in the given numbers: Total Assets = $4,272,335 / (0.086 / 0.65) = $32,290,904 (rounded to the nearest dollar).