Question I need help with (answered last question for context to this one) : If Fab Corp can earn 12% after tax on new investments, estimate how fast its net income can grow annually in the future. (Your answer should be a % carried to one place.)

Question I need help with (answered last question for context to this one) : If Fab Corp can earn 12% after tax on new investments, estimate how fast its net income can grow annually in the future. (Your answer should be a % carried to one place.)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 55E: Rebert Inc. showed the following balances for last year: Reberts net income for last year was...

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Question

Fab Corp had net income of $5.42/share last year, and it paid $2.04/share in dividends last year. A) What was its Dividend Payout Ratio last year? B) What was its Retention Rate last year? (Your answers should be a % carried to one place.)

Dividend Payout Ratio = Dividends per share/Earnings per share x 100%

= 2.04/5.42

= 0.37638376

= 37.64%

Retention Rate: 1 – Dividend per share

= 1-37.64%

=52.36%

Question I need help with (answered last question for context to this one) :

If Fab Corp can earn 12% after tax on new investments, estimate how fast its net income can grow annually in the future. (Your answer should be a % carried to one place.)

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