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15. Thought Problem, 2. Here are a couple of handy formulas used to calculate the sustainable growth rate. One of them uses ending period equity
15. Thought Problem, 2. Here are a couple of handy formulas used to calculate the sustainable growth rate. One of them uses ending period equity to calculate ROE, and one of them uses beginning of period equity to calculate ROE. They will give the same answer for g. the sustainable growth rate (Each sub part is below is worth 10 points.) Sustainable Growth Rate = ROE .b Sustainable Growth Rate = ROE .b 1 - ROE + b Here is some handy information. Net Income = 30, Dividend payout ratio is 40%, Beginning Assets is 300, The Debt to Equity Ratio is.50. A. Calculate beginning of period equity. B. Calculate ending period equity. C. Calculate the sustainable growth rate using the beginning equity level. D. Calculate the sustainable growth rate using the ending equity level
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