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Calculate the retention rate required for the following company to have a sustainable growth rate of 10%. Assume all ratios (profit margin, debt/equity, ROE, etc)

Calculate the retention rate required for the following company to have a sustainable growth rate of 10%. Assume all ratios (profit margin, debt/equity, ROE, etc) will remain constant.

2014 Company Data

Sales = $500M All Costs (excluding taxes) = $300M

Taxes = $50M Assets = $2B

Equity Multiplier = 2.0

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