The sustainable growth rate a. is the highest growth rate attainable for a firm that pays...
The sustainable growth rate
a. is the highest growth rate attainable for a firm that pays no dividends
b. is the highest growth rate attainable for a firm without issuing new stock.
c. can never be greater than the return on equity.
d. can be increased by decreasing leverage.
Homework Answers
Sustainable growth rate is the maximum growth rate a firm can achieve without issuing additional equity but with additional debt such that it is enough to maintain the long term debt ratio.
Answer is b. is the highest growth rate attainable for a firm without issuing new stock.
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The sustainable growth rate
a. is the highest growth rate attainable for a firm that pays...
For a firm that pays no dividends, O a. Its return on equity will equal its sustainable growth rate. F COW O b. It...
For a firm that pays no dividends, O a. Its return on equity will equal its sustainable growth rate. F COW O b. It is unable to pay any dividends. O c. It will have restrictions on its sustainable growth. e ti zdi da predlagala nila sa akin O d. Its shareholders will require a return equal to its return on equity. urne
The sustainable growth rate of a firm is best described as the _____ growth rate achievable...
The sustainable growth rate of a firm is best described as the _____ growth rate achievable _____. A maximum; excluding external financing of any kind B maximum; with unlimited debt financing C minimum; assuming a 100 percent retention ratio D minimum; if the firm maintains a constant equity multiplier E maximum; excluding any external equity financing while maintaining a constant debt-equity ratio
If a firm Explain grows faster than its sustainable growth rate, is that growth value decreasing?...
If a firm Explain grows faster than its sustainable growth rate, is that growth value decreasing? NOTE: This question has two parts, first: is the rate value decreasing, and second explain your answer.
5. Sustainable growth As a firm grows, it must support increases in revenue with new investments...
5. Sustainable growth As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Bohemian Manufacturing Company: Bohemian Manufacturing Company has no debt in its capital structure and has $300,000,000 in assets. Its sales...
There is a general consensus among analysts that Portis Inc. has a sustainable dividend growth rate...
There is a general consensus among analysts that Portis Inc. has a sustainable dividend growth rate of 5.5%. Given that Portis pays out 25% of its net incomes as dividends each year, what is the return on equity (i.e. ROE) for this firm? Not enough information. 4.00% 7.33% 5.50%
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm...
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions? ОА. New debt and external equity, provided the debt-equity ratio remains constant OB. No new external financing of any kind OC No new equity and a constant debt-equity ratio OD New debt and external equity in equal proportions ОЕ. No new debt but additional external equity equal to the increase in retained earnings
There is a general consensus among analysts that Portis Inc. has a sustainable dividend growth rate...
There is a general consensus among analysts that Portis Inc. has a sustainable dividend growth rate of 5.5%. Given that Portis pays out 25% of its net incomes as dividends each year, what is the return on equity (i.e. ROE) for this firm? Question 23 options: 5.50% 7.33% Not enough information. 4.00%
5. Sustainable growth Aa Aa E As a firm grows, it must support increases in revenue...
5. Sustainable growth Aa Aa E As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Cold Duck Manufacturing Inc.: Cold Duck Manufacturing Inc. has no debt in its capital structure and has...
1. Cash flow to creditors must be negative when: a. net new borrowings exceed the amount...
1. Cash flow to creditors must be negative when: a. net new borrowings exceed the amount of interests paid b. the amount of dividends paid exceeds the net new borrowings. c. dividends payment exceed the interests payments. d. both the cash flow from assets and the cash flow to shareholders are negative. 2. The greater the level of debt incurred by a firm means: a. the greater the number of shares of common stock issued The higher the financial leverage...
4. The firm D pays a current dividend of $2.00 Growth rate is 25% for the...
4. The firm D pays a current dividend of $2.00 Growth rate is 25% for the next three years growth then declines linearly over eight years to a stable rate of 6%. The required return on this stock is 10% and the current stock price of firm D is $50. Calculate the value using an appropriate model.
For a firm that pays no dividends, O a. Its return on equity will equal its sustainable growth rate. F COW O b. It is unable to pay any dividends. O c. It will have restrictions on its sustainable growth. e ti zdi da predlagala nila sa akin O d. Its shareholders will require a return equal to its return on equity. urne
If a firm Explain grows faster than its sustainable growth rate, is that growth value decreasing? NOTE: This question has two parts, first: is the rate value decreasing, and second explain your answer.
5. Sustainable growth As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Bohemian Manufacturing Company: Bohemian Manufacturing Company has no debt in its capital structure and has $300,000,000 in assets. Its sales...
There is a general consensus among analysts that Portis Inc. has a sustainable dividend growth rate of 5.5%. Given that Portis pays out 25% of its net incomes as dividends each year, what is the return on equity (i.e. ROE) for this firm? Not enough information. 4.00% 7.33% 5.50%
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions? ОА. New debt and external equity, provided the debt-equity ratio remains constant OB. No new external financing of any kind OC No new equity and a constant debt-equity ratio OD New debt and external equity in equal proportions ОЕ. No new debt but additional external equity equal to the increase in retained earnings
5. Sustainable growth Aa Aa E As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Cold Duck Manufacturing Inc.: Cold Duck Manufacturing Inc. has no debt in its capital structure and has...
1. Cash flow to creditors must be negative when: a. net new borrowings exceed the amount of interests paid b. the amount of dividends paid exceeds the net new borrowings. c. dividends payment exceed the interests payments. d. both the cash flow from assets and the cash flow to shareholders are negative. 2. The greater the level of debt incurred by a firm means: a. the greater the number of shares of common stock issued The higher the financial leverage...
4. The firm D pays a current dividend of $2.00 Growth rate is 25% for the next three years growth then declines linearly over eight years to a stable rate of 6%. The required return on this stock is 10% and the current stock price of firm D is $50. Calculate the value using an appropriate model.
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