Stone Sour Co. has an ROA of 7 percent and a payout ratio of 25 percent. 1. What

Question

Stone Sour Co. has an ROA of 7 percent and a payout ratio of 25 percent.

1. What is its internal growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Internal growth rate ___________ %

Gold Corp. has an ROE of 15 percent and a payout ratio of 23 percent.

What is its sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Stone Sour Co. has an ROA of 7 percent and a payout ratio of 25 percent.

Explanation / Answer

internal growth rate = 7%*(1 - 0.25)/(1 - 7%*(1-0.25))

internal growth rate = 5.54%

sustainable growth rate = 15%*(1 - .23)

sustainable growth rate = 11.55%

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