FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Can you answer this general accounting question?

Use the following information for Alpha-Beta, Inc. (ABI):
Sales
$100,000
Costs
$55,000
Depreciation
$6,000
Dividend paid
$10,000
Retained Earnings Added
$14,500
Total Assets
$85,000
Equity
$45,000
Selling, General and Administrative costs $0
Tax Rate
35%
If the profit margin, total asset turnover, and dividend payout ratios for ABI remain unchanged, what is the
internal growth rate it can achieve during the following year?
a. 25.00%
b. 21.86%
c. 20.57%
d. 19.72%
e. 26.87%
f. 23.64%
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Transcribed Image Text:Use the following information for Alpha-Beta, Inc. (ABI): Sales $100,000 Costs $55,000 Depreciation $6,000 Dividend paid $10,000 Retained Earnings Added $14,500 Total Assets $85,000 Equity $45,000 Selling, General and Administrative costs $0 Tax Rate 35% If the profit margin, total asset turnover, and dividend payout ratios for ABI remain unchanged, what is the internal growth rate it can achieve during the following year? a. 25.00% b. 21.86% c. 20.57% d. 19.72% e. 26.87% f. 23.64%
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