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Homework Answers
(7) Sustainable Growth Rate is the growth rate that can be achieved without issuing additional equity or altering the debt-to-equity ratio (capital structure) of the firm. It is calculated by multiplying the Return on Equity with the retention ratio.
Net Income = $ 2262 and Equity = $ 21650
Return on Equity = (Net Income / Equity) x 100 = (2262 / 21650) x 100 = 10.448 %
Constant Dividend Payout Ratio = d = 30%
Retention Ratio = 1-d = 1-0.3 = 0.7
Sustainable Growth Rate = Retention Ratio x ROE = 0.7 x 10.448 = 7.31363 ~ 7.31 %
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Please give answers as formulas!!! (using cell names)
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Please give answers as formulas!!! (using cell names)
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