Answer:
17.30% sustainable growth rate
Explanation:
sustainable growth rate:
retention ratio x return on equity
retention ratio = 1 - payout ratio = 1 - 0.30 = 0.7
from each dollar of net income the company keeps 70 cents for re-investing.
return on equity: net income / equity
20,905 / 84,600 = 0,247101
each dollar of equity generates 0.247104 cents of income
we keep 70% of this, therefore:
0.2471 x 0.7 = 0,1729728 = 17.30% sustainable growth rate
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Answer:
The correct answer is E. respond quickly
Explanation:
Respond quickly is a great strategy to gain customers' fidelity.
Answer:
Expected Value of the return = 12.6%
Explanation:
<em>The expected rate of return is the weighted average of all the possible returns associated with an investment decision. The returns are weighted using the probability associated with their outcomes.
</em>
Expected return = WaRa + Wb+Rb + Wn+Rn
W- weight of the outcome, R - return of the outcome
W- Probability of the expected outcome, R- expected return under a circumstance
<em>The probability of having a normal economy</em>
Note that the sum of the probability of different outcomes should equal to one. Hence, the probability of economy being normal is
= 100% -(15%+30%)= 55%.
<em>Expected Value of the return </em>
(0.3× 30%) + (0.55× 12%) + (0.15 × -20%)
=0.126
=0.126
× 100
= 12.6
%
Expected Value of the return = 12.6%
The return on equity of Oscar's dog house is 18.6% (=12.5%*1.49) based on the information shown on the question above. This problem can be solved using the DuPont identity which stated as Return on Equity = profit margin * asset turnover * equity multiplier and in this problem, we do not have the asset turnover ratio. We can make a simple alteration to the formula because of Return on asset = profit margin * asset turnover. Therefore, we will find a new formula which stated as RoE = (Return on asset*equity multiplier).