Sustainable growth rate

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Sustainable growth rate

Last year Lakesha’s Lounge Furniture Corporation had an ROE of 18.0 percent and a dividend payout ratio of 23 percent. What is the sustainable growth rate?

What is the sustainable growth rate? (Do not round intermediatecalculations. Round your answer to 2 decimal places.)

Sustainable growth rate

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Answer 1

Answer #1

ROE = r = 18%
dividend payout ratio = 23%

Sustainable growth rate = ROE * (1-dividend payout ratio)
= 18% * (1-23%)
= 18% * 77%
= 13.86%

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answered by: edriona

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Answer 2

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Sustainable growth rate

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