2. 22.

Sustainable growth rate [LO 4.3] Dudinin Ltd had equity of

$145 000 at the beginning of the year. At the end of the year, the company had total assets of $210 000. During the year, the company sold no new equity. Profit for the year was $27 000 and dividends were

$5 800. What is the sustainable growth rate for the company? What is the sustainable growth rate if you use the formula ROE × b and beginning of period equity? What is the sustainable growth rate if you use end of period equity in this formula? Is this number too high or too low? Why?