The Steiben Company has a return on equity of 13.1 percent and a dividend payout ratio of

Question:

The Steiben Company has a return on equity of 13.1 percent and a dividend payout ratio of 40 percent.

a. What is the company’s sustainable growth rate?

b. Can the company’s actual growth rate be different from its sustainable growth rate? Why or why not?

c. How can the company increase its sustainable growth rate?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...