AAC Inc. earned $3.00 per share. It paid S1.60 in dividends per share. Its return on equity is 126. Find itssustainable growth rate.A.4.5%B.5.6%C.6.3%D.7.2%E.8.5%

Financial management consists of directing, planning, organizing and controlling of financial…

Answered: AAC Inc. eamed $3.00 per share. It paid…

AAC Inc. eamed $3.00 per share. It paid $160 in dividends per share. Its return on equity is 129e. Find its sustainable growth rate. 4.5% B. 5.6% C. 6.3% D. 7.2% E. 8.5%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 6P

See similar textbooks

Related questions

Q: Nathalie Company has earnings available for common shareholders of P700 produced by sales of…

A: The net income is the net profit of the company earned during the period. The net income includes…

Q: A company generated revenues of $194 million during the last twelve months, with an operating margin…

A: P/E ratio can be calculated by using this equation P/E Ratio =market price par share/Earning par…

Q: ABC Company had addition to retained earnings for the current fiscal year just ended of $395,000.…

A: Part (5): Calculation of price earnings ratio: Answer: Price earnings ratio is 18.44 times

Q: and its stock price is P32. per share. What is Alessandra Company market/book Alessandra Company has…

A: Calculation of market to book ratio are as follows

Q: Electronics World Inc. paid out $41.5 million in total common dividends and reported $278.4 million…

A: Retained earnings means accumulated earnings of the business, which the business has earned over a…

Q: Lotharan Corp. has yearly sales of $28.3 million and costs of $12.5 million. The company’s balance…

A: Calculation of Enterprise Value and Price per share:The enterprise value is $123,240,000 and price…

Q: Switch Engines Inc. has a capital structure of 40% debt and 60% common equity. The current market…

A: The amount that can be distributed as dividend but yet ploughed back by management for any planned…

Q: Makers Corp. had additions to retained earnings for the year just ended of $285,000. The firm paid…

A: Given the following information: Addition to retained earnings: $285,000 Total equity: $4,850,000…

Q: Markus Company’s common stock sold for $2.75 per share at the end of this year. The company paid a…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: What is the net income for the current year? During the year, Homo sold 100,000 shares with P20 par…

A: Net income for the current year This can be arrived using the Cash flow statement as follows:

Q: Draiman Company has a debt-equity ratio of 0.75. Return on assets is 10.4 percent, and total equity…

A: Given the following information: Debt-equity ratio: 0.75 Return on assets: 10.4% Total equity:…

Q: The value of equity is $150,000,000. The return on equity is 15%, the cost of capital is 18% and the…

A: Given; Return on equity = 15% Total equity = $150,000,000 Retention ratio = 60%…

Q: Dellf’s has a profit margin of 3.8 percent on sales of $287,200. The firm currently has 5,000 shares…

A: Given: Profit margin = 3.8% Sales = $287,200 Number of shares = 5,000 Market price = $7.11 per share

Q: A company has recently declared a dividend of 12 cents per share. The share price is $3.72 cum div…

A: A company has several sources from where it can raise funds. It can issue equity shares and the…

Q: LILSO’s group's published annual report showed the following: -Operating profit for the year was EGP…

A: The income that a common shareholder earns on the shares which are under the possession of the…

Q: Blue Co., a firm that grows at a constant rate of 5%, is trying to estimate its weighted average…

A: Growth rate (g) = 5% Recent dividend (D0) = P5 Current share price (P0) = P52.50

Q: LNA, a firm that grows at a constant rate of 5%, is trying to estimate its weighted average cost of…

A: The cost of equity can be calculated with the help of dividend discount model.

Q: A firm paid a dividend of Rs. 3 to equity holders. The firm's cost of equity is 15%; and the firm's…

A: According to the Gordon Growth model the value of the stock is expected dividend divided by the (…

Q: 4. Bebe Co. declared dividends of Php 2 per share for their performance last year after the…

A: Market value of share = Php 45 Dividend = Php 2

Q: Goliath Corp. just paid an annual dividend of $5.40 per share. The dividend growth rate is 5.5…

A: Annual dividend (D0) = $5.40 Growth rate (g) = 5.5% Tax rate = 21% Stock price (P0) = $58.50

Q: Burgos Co. declared dividends amounting to Php1.50 per share this year out of its Php500,000 net…

A: Given, Dividend per share = 1.50 Net Income = 500,000 Shareholders' equity = 2,500,000 Return on…

Q: The target payout ratio for Dynamic Super Machines Ltd. is 0.4. The dividend per share for the…

A: Ans. For determining the market capitalization, we need to calculate the price of share of the…

Q: ABC Ltd. just declared and paid a dividend @ 15% on equity shares of Rs 100 each. The expected…

A: Answer) Calculation of Cost of Equity Cost of Equity = Expected dividend per share in next year/…

Q: Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $2.80 next year. The growth…

A: The current price of the stock is the sum of the present values of entire inflows from the stock or…

Q: BFC Ltd. has the following financial information: Net Profit: $5 million; Sales: $100 million;…

A: Return on equity (ROE) is a financial ratio which is an indicator of how efficiently a company is…

Q: Bebe Co. declared dividends of Php 2 per share for their performance last year after the declaration…

A: Answer) Calculation of Dividends Yield Ratio Dividends Yield Ratio = Dividend Per Share/ Market…

Q: VALUATION METHOD

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer one question at a…

Q: Firm has 120,000 outstanding shares, growth rate of 3.6%, with 648,200 in Free Cash Flow and a…

A: Free cash flow for a form is the cash flow available to a company after it has spent all its capital…

Q: A firm's current market value of equity is $100 million. It has one million shares outstanding. The…

A: Current market price per share Current market price per share = Market value of equity / Number of…

Q: A company has revenues of 24 million and depreciation and amortization expenses of 9 million.…

A: Given, Revenue = 24 million Depreciation and amortization expenses = 9 million Operating margin =…

Q: A company had total revenues of $64 million, operating margin of 32.4%, and depreciation and…

A: Frist we need to calculate enterprise value by using this equation Enterprise value(EV) =Total…

Q: Company has a capital structure of 45% equity and 55% debt It just paid out a dividend of $2.00 per…

A: Given, The dividend paid is $2 per share. Price of share is $21. Underwriting commission is 8%…

Q: A company has a net profit after taxes of Rs 1,20,000 and pays a cash dividend of Rs 48000 on its…

A: Earnings Yield Ratio: The earnings yield is calculated by dividing the current share price by the…

Q: A company had total revenues of $42 million, operating margin of 20.2%, and depreciation and…

A: EV means enterprise value and EBITDA is earnings before interest, taxes, depreciation and…

Q: ABC Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to…

A: WACC = (Ke * We) + (Kd * Wd) Ke = Cost of equity Kd = Cost of debt We = Weight of equity Wd = Weight…

Q: 3. (a): The stock price for Bank Muscat was OMR 100 per share one year ago. The stock is currently…

A: Return = (P1+D)/P0 -1 P1 is current trading price P0 is stock price 1 year ago D is dividend paid…

Q: Ames, Inc., has a current stock price of $58. For the past year, the company had a net income of…

A: Given the following information: Current stock price: $58 Net income: $8,400,000 Total equity:…

Q: Botox Facial Care had earnings after taxes of $284,000 in 20X1 with 200,000 shares of stock…

A: EPS means earnings of the company on per share. It is computed by dividing the total earnings after…

Q: A firm with sales of $1,000,000, net profits after taxes of $60,000, total assots of $1,500,000, and…

A: Return on equity means the amount of profit as percentage of equity. Equity means the amount that…

Q: A company has a reported net income of RM12 million and 60 million shares outstanding. a) Estimate…

A: Net income = RM 12,000,000 Number of shares = RM 60,000,000 P/E Ratio = 14.0

Q: Kliza Company's net income last year was P130,000. The company paid preferred dividends of P42,000…

A: Return on equity (ROE) refers to the evaluation of the profitability of a company through the…

Q: Last year, Headline News Corporation paid $600,000 in dividends and retained $360,000 of the…

A: Dividend: It is that share of the profit which is distributed among the company’s shareholders.

Q: ABC Company had addition to retained earnings for the current fiscal year just ended of $395,000.…

A: Since, there are more than three parts in one question, the answer for first four parts is provided…

Q: Maji maji Limited had earnings attributable to ordinary shareholders equal to Ksh. 8,800,000. The…

A: a. Theoretical value per share = Dividend per share / return on equity b. If growth Rate is 7% =…

Q: Bulldogs Inc. has forecasted that its net income will be P400,000. The company has debt ratio of…

A: Answer) Under residual model, dividend is paid to common stockholders after deduction of amount to…

Q: The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book…

A: Shareholders/ Owner’s equity: The shareholders are the owners of the company and the shareholders…

Question

100%

AAC Inc. earned $3.00 per share. It paid S1.60 in dividends per share. Its return on equity is 126. Find its
sustainable growth rate.
A.
4.5%
B.
5.6%
C.
6.3%
D.
7.2%
E.
8.5%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the dividends paid to common stockholders for last year were 2,600,000 and that the market price per share of common stock is 51.50. Required: 1. Compute the dividends per share. 2. Compute the dividend yield. (Note: Round to two decimal places.) 3. Compute the dividend payout ratio. (Note: Round to two decimal places.)
AAC Inc. earned $3.00 per share. It paid $1.60 in dividends per share. Its return on equity is 12%. Find its sustainable growth rate. А. 4.5% В. 5.6% C. 6.3% D. 7.296 E. 8.5%
O'Brien Inc. has the following data: rRf= 5.00% rPM = 6.00% b = 1.10 What is the firm's cost of equity from retained earnings based on the CAPM? a. 11.83% b. 13.22% C. 11.25% d. 8.93% e. 11.60%
2. O'Brien Inc. has the following data: IRE = 5.00%; RPM = 6.00%; and b = 1.25. What is the firm's cost of equity from retained earnings based on the CAPM? a. 13.75% b. 11.88% c. 12.25% d. 9.63% e. 12.50%
O'Brien Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.70. What is the firm's cost of equity from retained earnings based on the CAPM? 15.20% 15.05% 17.33% 13.68% 15.35%
Please provide solutions. Thank you! The following information relates to Konbu Corporation for last year: Price earnings ratio = P15 Dividend payout ratio = 30% Earnings per share = P5 What is Konbu's dividend yield ratio for last year?a.1.5%b.2.0%c.4.5%d.10%
16. O'Brien Inc. has the following data: TRF = 5.00%; RPM = 6.00%; and b = 1.10. What is the firm's cost of equity from retained earnings based on the CAPM? a. 11.83% b. 13.22% C. 11.25% d. 8.93% e. 11.60% istiqa
Recto Co. has a price earnings ratio of 10, earnings per share of P2.00, and a pay out ratio of 75%. The dividend yield is a. 25.0% b. 22.0% c. 7.5% d. 10.0%
A firm paid a dividend of Rs. 3 to equity holders. The firm's cost of equity is 15%; and the firm's common equity per share is Rs. 40. Using the Gordon Growth Model, the value of g for the firm is O a. 8.98% O b. 7.98% O c. 6.98% O d. 5.2%
K Big Auto has a ROE of 7.6%. Its earnings per share are $1.82, and its dividends per share are $0.67. Estimate Big Auto's growth rate Big Auto's growth rate is%. (Round to one decimal place.)
Firestone Co. just paid a dividend of $1.50 per share and its earnings per share is $9.00. Its book value of equity on per share basis is $36. Calculate Firestone's growth rate: A) 4.17% B) 5.25% c) 25% D) 20.83%
A company has stock which costs $42.75 per share and pays a dividend of $2.70 per share this year. The company's cost of equity is 9%. What is the expected annual growth rate of the company's dividends? O A. 10.72% В. 5.36% С. 2.68% O D. 8.04%