Retention ratio is 0.55 and return on equity is 12.5% then growth retention model would be

The correct answer is C. 13.05%.

The growth retention model is a formula that calculates the rate of growth of a company’s earnings per share (EPS). The formula is:

$g = r \times (1 – b)$

where:

• $g$ is the rate of growth of EPS
• $r$ is the return on equity
• $b$ is the retention ratio

In this case, $r = 12.5\%$ and $b = 0.55$. Substituting these values into the formula, we get:

$g = 12.5\% \times (1 – 0.55) = 13.05\%$

Therefore, the growth retention model would be 13.05%.

Option A is incorrect because it is the rate of return on equity, not the rate of growth of EPS. Option B is incorrect because it is the rate of return on assets, not the rate of growth of EPS. Option D is incorrect because it is the rate of return on invested capital, not the rate of growth of EPS.