23. Bio-Plasma Corp. is growing at 30% per year. It is all-equity-financed and has total assets of...

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23. Bio-Plasma Corp. is growing at 30% per year. It is all-equity-financed and has total assets of $1 million. Its return on equity is 20%. Its plowback ratio is 40%.

a. What is the internal growth rate?

b. What is the firm’s need for external financing this year?

c. By how much would the firm increase its internal growth rate if it reduced its payout rate to zero?

d. By how much would such a move reduce the need for external financing? What do you conclude about the relationship between dividend policy and requirements for external financing?
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Principles Of Corporate Finance

ISBN: 9780071314176

10th Global Edition

Authors: Richard Brealey

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