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Bank C wants to grow during the next year, but doesn't want to add fresh capital. In the current year, it expects its ROA of
Bank C wants to grow during the next year, but doesn't want to add fresh capital. In the current year, it expects its ROA of 1.5% and an Equity to asset ratio of 9%. It also plans a dividend payout ratio of 25%. By how much can the bank's asset grow under these expectations? If the bank plans to add capital to the extent of 1% of its total assets, what would be the growth in assets? Assume that there is no change in the expected earnings.
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