What Is the Sustainable Growth Rate for a Firm with Net

question 105

Multiple Choice

What is the sustainable growth rate for a firm with net income of $2.5 million, cash dividends of $1.5 million, and return on equity of 18%?

• A)3.0%
• B)5.4%
• C)7.2%
• D)10.8% Sustainable growth rate = plowback ratio x ROE
• = (1 - payout ratio) x ROE
• =

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