A firm has adopted a policy whereby it will not seek any additional external financing.Given this,what is the maximum growth rate for the firm if it has net income of $12,100,total equity of $94,000,total assets of $156,000,and a 40 percent dividend payout ratio?
A)4.88 percent
B)5.11 percent
C)6.62 percent
D)7.67 percent
E)8.37 percent

Question

Quizplus · Accepted Answer

Internal growth rate = [($12,100/$156,000) × (1 - 0.40)]/{1 - [($12,100/$156,000) × (1 - 0.40)]} = 4.88 percent

A Firm Has Adopted a Policy Whereby It Will Not