Using the information in the following table, calculate this company's: $49,400 $393,500 $249,900 0% Net Income Beginning Total Assets Beginning Stockholders' Equity Payout Ratio a. Internal growth rate. b. Sustainable growth rate. c. Sustainable growth rate if it pays out 42% of its net income as a dividend. The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chap in these problems in anticipation of the return of standard depreciation practices during your career. D a. Internal growth rate. The internal growth rate is%. (Round to one decimal place.) b. Sustainable growth rate. The sustainable growth rate is %. (Round to one decimal place.) c. Sustainable growth rate if it pays out 42% of its net income as a dividend. The sustainable growth rate, if it pays out 42% of its net income as a dividend, is %. (Round to one decimal place.)
Using the information in the following table, calculate this company's: $49,400 $393,500 $249,900 0% Net Income Beginning Total Assets Beginning Stockholders' Equity Payout Ratio a. Internal growth rate. b. Sustainable growth rate. c. Sustainable growth rate if it pays out 42% of its net income as a dividend. The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chap in these problems in anticipation of the return of standard depreciation practices during your career. D a. Internal growth rate. The internal growth rate is%. (Round to one decimal place.) b. Sustainable growth rate. The sustainable growth rate is %. (Round to one decimal place.) c. Sustainable growth rate if it pays out 42% of its net income as a dividend. The sustainable growth rate, if it pays out 42% of its net income as a dividend, is %. (Round to one decimal place.)
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
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
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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![Here is a detailed transcription of the image for educational purposes:
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**Using the information in the following table, calculate this company's:**
- **Net Income**: $49,400
- **Beginning Total Assets**: $393,500
- **Beginning Stockholders' Equity**: $249,900
- **Payout Ratio**: 0%
---
**Calculations:**
a. **Internal growth rate.**
b. **Sustainable growth rate.**
c. **Sustainable growth rate if it pays out 42% of its net income as a dividend.**
*The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.*
---
**Detailed Questions:**
a. **Internal growth rate.**
- The internal growth rate is [ ] %. (Round to one decimal place.)
b. **Sustainable growth rate.**
- The sustainable growth rate is [ ] %. (Round to one decimal place.)
c. **Sustainable growth rate if it pays out 42% of its net income as a dividend.**
- The sustainable growth rate, if it pays out 42% of its net income as a dividend, is [ ] %. (Round to one decimal place.)
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Transcribed Image Text:Here is a detailed transcription of the image for educational purposes:
---
**Using the information in the following table, calculate this company's:**
- **Net Income**: $49,400
- **Beginning Total Assets**: $393,500
- **Beginning Stockholders' Equity**: $249,900
- **Payout Ratio**: 0%
---
**Calculations:**
a. **Internal growth rate.**
b. **Sustainable growth rate.**
c. **Sustainable growth rate if it pays out 42% of its net income as a dividend.**
*The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.*
---
**Detailed Questions:**
a. **Internal growth rate.**
- The internal growth rate is [ ] %. (Round to one decimal place.)
b. **Sustainable growth rate.**
- The sustainable growth rate is [ ] %. (Round to one decimal place.)
c. **Sustainable growth rate if it pays out 42% of its net income as a dividend.**
- The sustainable growth rate, if it pays out 42% of its net income as a dividend, is [ ] %. (Round to one decimal place.)
---
Expert Solution
Step 1 Analysis
Internal growth rate is growth rate that is generated by company without using outside funds
Internal growth rate =Retention Ratio*Return on assets(ROA)
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