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Metronic has $70M in equity and $30M in debt and forecasts $14M in net income for the year. It currently pays dividends equal to 20%
Metronic has $70M in equity and $30M in debt and forecasts $14M in net income for the year. It currently pays dividends equal to 20% of its net income. You are analyzing a potential change in payout policy -an increase in dividends to $30% of net income. How would this change affect your internal and sustainable growth rates?
What is the sustainable growth rate of Metronic under the current payout policy?
Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05
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