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Johnson Products earned $4.35 per share last year and paid a dividend of $1.70 per share....

Johnson Products earned $4.35 per share last year and paid a dividend of $1.70 per share. If ROE was 17 percent, what is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

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Answer #1

Ans 10.36%

Dividend Payout Ratio = Dividend Paid / EPS
1.70 / 4.35
39.08%
Retention Ratio = ( 1 - Dividend Payout Ratio)
1 - 39.08%
60.92%
Sustainable Rate of Growth = Retention Ratio *Return on Equity
60.92% * 17%
10.36%
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