The newspaper reported last week that Bennington Enterprises earned $34.07 million this year. The report also stated that the fi

Question

4 years ago

5

rm’s return on equity is 16 percent. The firm retains 75 percent of its earnings. What is the firm's earnings growth rate?

1 answer:

Arada [10] · Answer 1 · 2021-12-16T03:34:52+03:00

Answer:

Earning growth rate will be 12 %

Explanation:

We have given that Bennington Enterprises earned $34.07 million this year.

Return equity = 16 % = 0.16

Retained earning = 75 % = 0.75

We have to find the firm's growth rate

We know that growth rate is given by

Growth rate = Return on equity × retained earning

So firm's growth rate will be equal to = 0.16×0.75 = 0.12

Therefore the earning growth rate will be 12 %