A Firm Has ROA of 30%,ROE of 40%,and a Payout

question 20

Multiple Choice

A firm has ROA of 30%,ROE of 40%,and a payout ratio of 10%.What is the firm's sustainable growth rate?

• A)12%
• B)3%
• C)4%
• D)27%
• E)36%

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Definitions:

Financial Plan

A comprehensive evaluation of an individual's or organization's current pay and future financial state by using currently known variables to predict future income, asset values, and withdrawal plans.

Additional Assets

Assets acquired by a business or individual that augment the existing resources, often enhancing operational capacity or value.

Future Periods

Time frames that have not yet occurred, often used in planning and forecasting.

Debt Capital

Funds obtained from borrowing.