A Firm Has a Return on Equity of 16 Percent

question 95

Multiple Choice

A firm has a return on equity of 16 percent, a return on assets of 11 percent, and a 40 percent dividend payout ratio. What is the sustainable growth rate?

• A) 5.72 percent
• B) 6.84 percent
• C) 7.12 percent
• D) 9.58 percent
• E) 10.62 percent

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Definitions:

Rule-Of-Reason Analysis

A legal principle used in antitrust law that evaluates the reasonableness of a restrictive business practice based on its circumstances, purpose, and effect on competition, rather than deeming it illegal per se.

Quick-Look Analysis

A preliminary, expedited evaluation of a situation or set of data to gain an initial understanding and guide further in-depth analysis.

California Dental Association

A nonprofit organization representing the dental profession in California, dedicated to advancing the profession through education, advocacy, and member services.

Clayton Act

A U.S. antitrust law enacted in 1914 to promote competition and prevent unfair business practices in the marketplace.