Gilmore, Inc., had equity of $220,000 at the beginning of the year. At the end of the yearthe company had total assets of $375,000. During the year, the company sold no newequity. Net income for the year was $46,000 and dividends were $6,800.a. Calculate the internal growth rate for the company. (Do not round intermediateb. Calculate the internal growth rate using ROA x b for beginning of period total assets.c. Calculate the internal growth rate using ROA x b for end of period total assets. (Docalculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.)(Do not round intermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)not round intermediate calculations and enter your answer as a percent roundedto 2 decimal places, e.g., 32.16.)

Question
Asked Feb 12, 2019
Gilmore, Inc., had equity of $220,000 at the beginning of the year. At the end of the year
the company had total assets of $375,000. During the year, the company sold no new
equity. Net income for the year was $46,000 and dividends were $6,800.
a. Calculate the internal growth rate for the company. (Do not round intermediate
b. Calculate the internal growth rate using ROA x b for beginning of period total assets.
c. Calculate the internal growth rate using ROA x b for end of period total assets. (Do
calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,
32.16.)
(Do not round intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
not round intermediate calculations and enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.)
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Gilmore, Inc., had equity of $220,000 at the beginning of the year. At the end of the year the company had total assets of $375,000. During the year, the company sold no new equity. Net income for the year was $46,000 and dividends were $6,800. a. Calculate the internal growth rate for the company. (Do not round intermediate b. Calculate the internal growth rate using ROA x b for beginning of period total assets. c. Calculate the internal growth rate using ROA x b for end of period total assets. (Do calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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Expert Answer

Step 1

a. Calculation of Internal Growth Rate of the company

To calculate the internal growth rate of the company, the return on assets during the beginning and end, addition to retained earnings and the plowback ratio has to be calculated as shown below,

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Step 2

The calculation of return on assets at the beginning and plowback ratio is shown below,

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Step 3

Now calculate the internal growth rate...

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