# FSA - Good One

87 A company released its latest financial statements: Net Income \$2,500,000 Dividends declared \$850,000 Total Equity \$6,500,000 Total Debt \$4,500,000 Total Assets \$14,000,000 The company’s dividend growth rate is closest to: A 24% B 25% C 26% D 27%

Is it 25%? I rounded a bit and obviously this wasn’t a good question to round with but I think it’s 25

B, 25%, unless I’ve forgotten the formula.

g = ROE * retention Since you got 25 also it better be right

Does it make a difference if dividends weren’t yet paid?

B is right.

What study session is this? I can’t calculate the growth if i dont know the next period dividend.

Sure you can, growth rate = ROE* Retention Rate I have a question: why is that shareholder’s equity and liabilities don’t match total assets?

map1: Total Debt is not necessarily equal to Total Liabilities, and L+E = A, not Debt + E = A Also, it is B, but you have to modify dupont to be: (NI/Assets)(Assets/Equity) Then multiply times (1-(Dividends/NI)), the retention rate