If a Venture Has a Return on Assets (ROA)of 10

question 33

Multiple Choice

If a venture has a return on assets (ROA) of 10%, an equity multiplier based on beginning equity of 4.0 times, and a dividend payout ratio of 60%, the sustainable growth rate would be:

• A)10%
• B)16%
• C)20%
• D)24%

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Definitions:

Cost of Retirement

The total expenses incurred when an individual stops working and enters retirement, including living and healthcare costs.

Retired Bonds

Bonds that have been repaid in full before or at maturity, thus removing the issuer's obligation to the holders.

Above the Cost

A situation where the selling price or market value of an asset exceeds its original purchase cost or production cost.

Bond Sinking Fund

A fund established by a bond issuer into which money is set aside over time, intended to be used to repay the principal amount of the bond at maturity.