Go-Go Industries is growing at 15% per year. It is all-equity-financed and has total assets of...
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Go-Go Industries is growing at 15% per year. It is all-equity-financed and has total assets of $1 million. Its return on equity is 10%. Its plowback ratio is 25%. a. What is the internal growth rate? (Enter your answer as a percent rounded to 2 decimal places.) b. What is the firm's need for external financing this year? (Enter your answer in dollars not in millions. Do not round intermediate calculations.) c. By how much would the firm increase its internal growth rate if it reduced its payout ratio to zero? (Enter your answer as a whole percent.) d. By how much would the firm reduce the need for external financing if it reduced its payout ratio to zero? (Enter your answer in dollars not in millions. Do not round intermediate calculations.) a. Internal growth rate % b. External financing C. Internal growth rate % d. External financing Go-Go Industries is growing at 15% per year. It is all-equity-financed and has total assets of $1 million. Its return on equity is 10%. Its plowback ratio is 25%. a. What is the internal growth rate? (Enter your answer as a percent rounded to 2 decimal places.) b. What is the firm's need for external financing this year? (Enter your answer in dollars not in millions. Do not round intermediate calculations.) c. By how much would the firm increase its internal growth rate if it reduced its payout ratio to zero? (Enter your answer as a whole percent.) d. By how much would the firm reduce the need for external financing if it reduced its payout ratio to zero? (Enter your answer in dollars not in millions. Do not round intermediate calculations.) a. Internal growth rate % b. External financing C. Internal growth rate % d. External financing
Expert Answer:
Answer rating: 100% (QA)
a Internal growth rate can be calculated as Return on equity Plowback Ratio Substituting the values ... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
Posted Date:
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