An analyst following Chevron Corp. (NYSE Euronext: CVX) wants to estimate the sustainable growth rate for the company by using the PRAT model. For this purpose, the analyst has compiled the data in the following table. Assets and equity values are for the end of the year; the analyst uses averages of beginning and ending balance sheet valuesin computing ratios based on total assets and shareholders' equity. For example average total assets for 2007 would be computed as (148,786 + 132,628)/2 = $140,707. Note: All numbers except for EPS and DPS are in $ millions.

Item 2007 2006 2005 2004

Net Income $18,688 $17,138 $14,099 $13,328

Sales 214,091 204,892 193,641 150,865

Total assets 148,786 132,628 125,833 93,208

Shareholders' equity 77,088 68,935 62,676 45,230

EPS 8.77 7.80 6.54 6.28

DPS 2.26 2.01 1.75 1.53

A. Compute the average value of each PRAT component during 2005-2007.

B. Using the overall mean value of the average component values calculated in Part A, estimate the sustainable growth rate for Chevron.

C. Judge whether Chevron has reached a mature growth stage.

Use excel