The most recent financial statements for Live Co. are shown here: Income Statement Sales Costs Taxable income Taxes (35%) Net income $4,000 Current assets Fixed -assets $1,360 Total 476 $884 2,640 Balance Sheet $4,252 Debt 10,409 Equity $14,661 Total $8,501 6,160 $14,661 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 28 percent dividend payout ratio. No external equity financing is possible. Required: What is the internal growth rate? (Do not round your intermediate calculations.)
The most recent financial statements for Live Co. are shown here: Income Statement Sales Costs Taxable income Taxes (35%) Net income $4,000 Current assets Fixed -assets $1,360 Total 476 $884 2,640 Balance Sheet $4,252 Debt 10,409 Equity $14,661 Total $8,501 6,160 $14,661 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 28 percent dividend payout ratio. No external equity financing is possible. Required: What is the internal growth rate? (Do not round your intermediate calculations.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:The most recent financial statements for Live Co. are shown here:
Income Statement
Sales
Costs
Taxable
income
Taxes (35%)
Net income
$4,000
2,640
Current
assets
Fixed
-assets
$1,360 Total
476
$884
Balance Sheet
$4,252 Debt
10,409 Equity
$14,661 Total
$8,501
6,160
$14,661
Assets and costs are proportional to sales. Debt and equity are not. The company
maintains a constant 28 percent dividend payout ratio. No external equity financing is
possible.
Required:
What is the internal growth rate? (Do not round your intermediate calculations.)
Transcribed Image Text:Multiple Choice
4.44%
1.72%
4.64%
4.54%
11.52%
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