Question: Question: 2. If Buddy Shoppe, Inc. has a 7% RCA, a 14% ROE, and a 25% Payout ratio, what are the Internal Growth Rate and

Question:

2. If Buddy Shoppe, Inc. has a 7% RCA, a 14% ROE, and a 25% Payout ratio, what are the Internal Growth Rate and the Sustainable Growth Rate? (ROE X b) SustainableGrowthRate = [1 - (ROE X b) ](ROA X b) InternalGrowthRate [1 - (ROA X b)]2. If Buddy Shoppe, Inc. has a 5% ROA, a 12% ROE, and a 20% Payout ratio, what are the Internal Growth Rate and the Sustainable Growth Rate? RR (b ) - - 0.2 8 IGR - 1 - ( 057 0.8 : 0. 04167 - 416678 0. 12 XO. 8 SGR - 1 - 10 . 12 x 0.8 ) = 6 . 1062 - 10. 6194Internal Growth Rosengarten . Dividend payout = 33.33% . b = 1 - Payout = 66.67% 132 ROA = = 0.044 = 4.4% 3,000 IGR = (0.044X0.6667) 0.0302=3.02% [1-(0.044X0.6667)]

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

The following figure depicts the financial situation of Jane Fawn. In period 0, her labour income and current consumption are $50; later, in period 1, her labour income and consumption will be $44....

Calendar in X Math 110, S X MyCoalition X Transfer Apj X university of X HW 3 MGM X Fin301InCla X Course Her X Mail - Yeake X how to scre X C...

1. If the Days-in-Inventory is 85 , the Days-Sales-in-Receivable is 45 , and the Average Payment Period is 35, what are the Operating Cycle and Cash Cycle? 2. If Buddy Shoppe, Inc. has a 5% ROA, a...

Need formula for ratios. Dec. 31, 2017 Dec 31, 2016 $ 687,521 $ 759,984 5,519 329,986 2,105,662 538,202 47,518 175,853 3,884,742 4,859,424 967,781 19,816 55,947 109,073 75,889 9,972,672 285,106...

Compare outputs, with your selected scenario first, & the other second Final Year Scenario X (my scenario) Scenario y (other scenario) Key Metrics/ Ratios (pick 5 meaningful metrics) What are the...

QUESTION 1 As a firm operating in a mature industry, Safee Industries is expected to maintain a constant dividend payout ratio and constant growth rate of earnings for the foreseeable future....

Question 7 (1 point) Rosevat Corp. has EPS of $5 and an ROE of 12%. Its current dividends is $2 per share. What is the firm's payout ratio and sustainable growth rate? Payout ratio of 50% and growth...

EFN, CR and SGR Worksheet.xisx 100% ; Home Layout Tables Charts SmartArt Formulas Data Review Font Alignment Number | Fill : Calibri (Body) IEW Wrap Text Percentage 0 00 .00 .0 Condit Forma B6 1 2 3...

Larissa has been talking with the companys directors about the future of East Coast Yachts. To this point, the company has used outside suppliers for various key components of the companys yachts,...

Balance Sheet 2003 2011 2012 2013 Cash 34000 51000 23800 17000 Accounts Receivable 136000 204000 231200 323000 Inventory 170000 255000 425000 688500 Total Current Assets 340000 510000 680000 1028500...

In Problems 1-4, write the first four terms of the sequence {an}. Then use Theorem D to show that the sequence converges? 1. 2. 3. 4. 4n 3 @n al 1l 2 n+ 1 /n an = 1 +-+-+ + rt 2 3

Refer to Problem 58. Determine the amount of taxable income and separately stated items in each case, assuming the corporation was a Subchapter S corporation. Ignore any carry forward items. a....

What are the beginning and ending amounts of equity At the beginning of the year, Quantum Industries' liabilities equal $92,000. During the year, assets increase by $64,000, and at year-end, assets...

Digital Solutions Inc. uses flexible budgets that are based on the following data: Sales commissions Advertising expense 14% of sales 20% of sales Miscellaneous administrative expense Office salaries...