FIN 3403 Businegs Finance: Summer B 2018 Question 8 (of 10) 10.00 points The Cra

Question

FIN 3403 Businegs Finance: Summer B 2018 Question 8 (of 10) 10.00 points The Crash Davis Driving School has an ROE of 13.5 percent and a payout ratio of 34 percent What is its sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal place Sustainable growth rate References Worksheet Leaming Objective: 03-03 Assess the determinants of a firms profitability and growth Difficulity: 1 Basic Section: 3.4 Intenal and Sustainable Growth M/

Explanation / Answer

ROE: 13.50% Payout ratio: 34% Sustainable Growth rate: ROE (1-Payout ratio) 13.50% (1-0.34) = 8.91% Sustainable Growth rate: 8.91%

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