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In 2019,Verizon Communications Inc.(ticker:VZ) had shareholders equity of $62.8 billion. The firm earned $19.2 billion in...

In 2019,Verizon Communications Inc.(ticker:VZ) had shareholders equity of $62.8 billion. The firm earned $19.2 billion in net income and paid $10 billion in dividends. Compute the firm’s internal growth rate.

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Answer #1

  

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Growth Rate = Retention Ratio * ROE

RoE = Net Income / Equity Value

= 19.2 / 62.8

= 30.57%

Retention Ratio = Net income - Dividend / net Income

= 19.2 - 10 / 19.2

= 47.92%

Growth Rate = 47.92% * 30.57%

= 14.65%

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