Homework Answers
ROA=Net income/Total assets
=(987/16127)
=0.061201711
Retention ratio=1-payout ratio
=(1-038)=0.62
Internal growth rate=(ROA*Retention ratio)/[1-(ROA*Retention ratio)]
=(0.061201711*0.62)/[1-(0.061201711*0.62)]
which is equal to
=3.95%(Approx).
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