The newspaper reported last week that Bennington Enterprises earned $34.07 milli
ID: 2640757 • Letter: T
Question
The newspaper reported last week that Bennington Enterprises earned $34.07 million this year. The report also stated that the firm's return on equity is 16 percent. Bennington retains 75 percent of its earnings. What is the firm's earnings growth rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Earnings growth rate % What will next year's earnings be? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars.) Next year's earnings $Explanation / Answer
Answer:
a. Growth rate = ROE * Retention
Hence Earning growth rate = 16*75% = 12%
b. Net year