Given that a firm's return on equity is 18% and management plans to retasin 40% fo earnings for investment purposes, what will be the firm's growth rate? a. 18% b. 7.2% c. 3.2% d. 40%
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Given that a firm's return on equity is 18% and management plans to retasin 40% fo earnings for investment purposes, what will be the firm's growth rate?
a. 18%
b. 7.2%
c. 3.2%
d. 40%
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- Growth Tech Inc., has earned $ 40 as Earnings Per Share. It proposes to pay $10 as dividend and reinvest the remaining. The return on investment by the firm is 20%. What is the growth rate of the firm’s earnings and dividends assuming a constant payout ratio and return on investment? A. 20% B. 18% C. 15% D. 12%Determining PB Ratio for Companies with Different Returns and Growth Assume that the present value of expected ROPI follows a perpetuity with growth g (Value = Amount/ [r - g]). Determine the theoretically correct PB ratio for each of the following companies A and B. Note: NOPAT = NOA » RNOA. Company Net Operating Assets Equity RNOA ROE Weighted Avg. Cost of Capital Growth Rate in ROPI $100 $100 19% 19% 10% 2% $100 $100 12% 12% 10% 4% A B Round answers to two decimal places. PB Ratio Company A Company BWhat is the sustainable growth rate for a firm with net Income of $2.5 million, cash dividends of $1.75 million, and return on equity of 18%? 3.0% O54% 7.2% O10.8%
- If the earnings per share of the firm is OMR 10 and the market price is OMR 100 and the growth rate is earning of the firm is 5 %. Calculate the cost of equity share capital. a. 12.5% b. 10% c. None of these d. 15%A firm is expected to earn $8 per share. The pay-out ratio is 60% and it will remain same. If the ROE of the firm is 25% and required rate of return on equity is 13%, find the present value of growth opportunities. a. $160.00 b. $61.54 c. $98.46 d. None of the ohOUIf the earnings per share of the firm is OMR 6.4 and the market price is OMR 80 and the growth rate of the firm is 5 %. Calculate Ke? a. None of these b. 10% c. 12% d. 13%
- (Measuring growth) Given that a firm's return on equity is 21 percent and management plans to retain 39 percent of earnings for investment purposes, what will be the firm's growth rate? If the firm decides to increase its retention rate, what will happen to the value of its common stock? Question content area bottom Part 1 a. The firm's growth rate will be enter your response here%. (Round to two decimal places.) Part 2 b. If the firm decides to increase its retention ratio, what will happen to the value of its common stock? (Select from the drop-down menus.) An increase in the retention rate will ▼ increase decrease the rate of growth in dividends, which in turn will ▼ increase decrease the value of the common stock.A firm is expected to earn $8 per share. The pay-out ratio is 60% and it will remain sam If the ROE of the firm is 25% and required rate of return on equity is 13%, find the prese walue of growth opportunities. a. $160.00 b. $ 61.54 c. $ 98.46 d. None of the aboveIf Gandhi & Co. has a 15% return on assets (ROA) and 25% is the pay-out ratio, what is its internal growth rate. а. 11.22% b. 12.68% с. 3.90% d. 10.12%
- Given that the NPV per share of the reinvestment of the retained earnings next year for a firm is $2.50. Assuming the growth of the NPV is constant at 5% each year, with the required return rate of 12%, what is the estimated Present Value of Growth Opportunity (PVGO)? a. $35.71 b. $59.23 c. $46.75 d. $24.56A firm wants a sustainable growth rate of 3.13 percent while maintaining a dividend payout ratio of 27 percent and a profit margin of 6 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? Multiple Choice O OO OO 69 times 61 times 73 times 20 times 39 timesA company will produce $3.00 in earnings per share at the end of the year. Reinvested earnings can produce a 14% return on equity. What is the PVGO if the company decides on a 30.0% plowback policy? Assume that investors have a 9.0% required rate of return. a. $10.42 b. $12.56 c. $13.86 d. $15.56