Question
Sustainable Growth Rate Problem Gilmore, Inc., had equity of $145,000 at the be-ginning of the year. At the end of the year, the company had
Sustainable Growth Rate Problem
Gilmore, Inc., had equity of $145,000 at the be-ginning of the year. At the end of the year, the company had total assets of $210,000. During the year, the company sold no new equity. Net income for the year was $27,000 and dividends were $5,800. What is the sustainable growth rate for the company? What is the sustainable growth rate if you use the formula ROE b and beginning of period equity? What is the sustainable growth rate if you use end of period equity in this formula? Is this number too high or too low? Why?
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