(Measuring growth) Thomas, Inc.'s return on equity is 14 percent and management has plans to retain 23 percent of earnings for investment in the company. a. What will be the company's growth rate? b. How would the growth rate change if management (i) increased retained earnings to 32 percent or (ii) decreased retention to 13 percent?

(Measuring growth) Thomas, Inc.'s return on equity is 14 percent and management has plans to retain 23 percent of earnings for investment in the company. a. What will be the company's growth rate? b. How would the growth rate change if management (i) increased retained earnings to 32 percent or (ii) decreased retention to 13 percent?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 5MC

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(Measuring growth) Thomas, Inc.'s return on equity is 13 percent and management has plans to retain 23 percent of earnings for investment in the company. a. What will be the company's growth rate? b. How would the growth rate change if management (i) increased retained earnings to 32 percent or (ii) decreased retention to 11 percent? a. The company's growth rate will be %. (Round to two decimal places.)
(Measuring growth) Thomas, Inc.'s retum on equity is 19 percent and management has plans to retain 21 percent of earnings for investment in the company. a. What will be the company's growth rate? b. How would the growth rate change if management (i) increased retained earnings to 34 percent or (ii) decreased retention to 15 percent? a. The company's growth rate will be %. (Round to two decimal places.) b. (i) If management increased retained earnings to 34%, the growth rate would be %. (Round to two decimal places.) b. (ii) If management decreased retention to 15%, the growth rate would be %. (Round to two decimal places.) Enter your answer in each of the answer boxes. Save for Later APRS W X
Quesuon Tei (Measuring growth) Thomas, Inc's return on equity is 11 percent and management has plans to retain 23 percent of earnings for investment in the company a, What will be the company's growth rate? b. How would the growth rate change if management (i) increased retained eamings to 32 percent or () decreased retention to 14 percent? a. The company's growth rate will be %. (Round to two decimal places.)
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