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(Measuring growth) Given that a firm's return on equity is 18 percent and management plans...

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(Measuring growth) Given that a firm's return on equity is 18 percent and management plans to retain 40 percent of earnings for investment purposes, what will be the firm's growth rate? If the firm decides to increase its retention rate, what will happen to the value of its common stock? a. The firm's growth rate will be 7.2 %. (Round to two decimal places.) b. If the firm decides to increase its retention ratio, what will happen to the value of its common stock? (Select from the drop-down menus.) An increase in the retention rate will increase the rate of growth in dividends, which in turn will increase the value of the common stock

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