Sustainable Growth Rate In the chapter, we discussed one calculation of the sustainable growth rate as:

Sustainable growth rate = _ 1_ 2R_ OR_EO_ E×_ ×b_ b_ In practice, probably the most commonly used calculation of the sustainable growth rate is ROE 3 b . This equation is identical to the sustainable growth rate equation presented in the chapter if the ROE is calculated using the beginning of period equity. Derive this equation from the equation presented in the chapter.