D | Question 17 5 pts While at a party with Mr. and Mrs, Fierro, your CEOs you a

Question

D | Question 17 5 pts While at a party with Mr. and Mrs, Fierro, your CEOs you ask them about the growth of the company without issuing more common or preferred stock. They respond by giving you the following Informations taxes $325.689 17 ROA 00395: net income: $759,941.40, total equity, $12,050205,18: Sustainable Growth Rate 0 0097:and common stock: $10,184.170.15 What is the plowback rate? 19.04% 11.73% 15.23% O 37,47 u 2635% 5 pts D Question 18 grow without esternal While meeing with Miss Ware, your Division Director you ask ber about how fast can the

Explanation / Answer

Answer:

Return on Equity = Net Income / Total Equity
Return on Equity = 759,941.40 / 12,050,205.18
Return on Equity = 0.0631

Sustainable Growth Rate = ROE * (1 – Dividend Payout Ratio)
0.0097 = 0.0631 * (1 – Dividend Payout Ratio)
(1 – Dividend Payout Ratio) = 0.1537
Dividend Payout Ratio = 0.8463 or 84.63%

Plowback Ratio = 1 – Dividend Payout Ratio
Plowback Ratio = 1 – 0.8463
Plowback Ratio = 0.1537 or 15.37%

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