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A dump of our free Chat sessions, in case it is useful. It excludes white boards used during paid sessions.





tutor2 : Hello Student, May I help you with your Math problems?
student : YES I WANT TO SOLVE THIS
student : 0.6= ROA(0.75)/ 1- ROA(0.75) SOLVE FOR ROA
tutor2 : ok.pls. wait here.
student : thx
tutor2 : 0.6* (1 - ROA(0.75)) = ROA(0.75) or, 0.6 - 0.75*0.6*ROA = 0.75*ROA
tutor2 : or, 0.6 - 0.45 * ROA = 0.75*ROA
tutor2 : or, -0.45*ROA - 0.75*ROA = - 0.6
student : MY textbook has an answer of .0814
tutor2 : or, - (0.45 + 0.75)*ROA = - 0.6
tutor2 : or, 1.2 * ROA = 0.6 or, ROA = 0.6/1.2 = 0.5 (Ans.)
tutor2 : then may be ur eq. is u sent me is wrong , because ans can not be wrong.
student : ROA = PM(TAT)
We can calculate the ROA from the internal growth rate formula, and then use the ROA in this equation to find the total asset turnover. The retention ratio is:
b = 1 – .25 b = .75
Using the internal growth rate equation to find the ROA, we get:
Internal growth rate = (ROA × b) / [1 – (ROA × b)] .06 = [ROA(.75)] / [1 – ROA(.75)]
Chapter 04 - Long-Term Financial Planning and Growth
4-11
ROA = .0814, or 8.14%
tutor2 : yes, ur qs i wrong , there should be 0.06 u typed 0.6 there.
student : I am so sorry
tutor2 : now i am again doing.
tutor2 : 0.06* (1 - ROA(0.75)) = ROA(0.75) or, 0.06 - 0.75*0.06*ROA = 0.75*ROA
tutor2 : or, 0.06 - 0.045*ROA = 0.75*ROA
tutor2 : or, 0.045*ROA + 0.75*ROA = 0.06
tutor2 : or, (0.045+0.75)* ROA = 0.06
tutor2 : or, ROA = 0.06/ (0.045 + 0.75) = 0.0754 = 7.54 % .
student : not the right answer still
student :
Abacus Co. wishes to maintain a growth rate of 11.4 percent a year, a debt–equity ratio of 1.5, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at 0.87.




What profit margin must the firm achieve?




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