Answer:
The dividend payout ratio is -48.12%
The Sustainable growth rate is 16.74%
Explanation:
In order to calculate the dividend payout ratio we would have to calculate the following formula:
growth rate=(ROE x dividend payout ratio ) / [ (1 - (ROE x dividend payout ratio))
To calcuate the ROE we would have to use the following formula:
ROE=Profit margin x Total asset turnover x Equity multiplier
ROE=0.045 x 1.05 x (1 + 1.05)
ROE=0.0968625
Therefore, dividend payout ratio would be calculated as follows:
0.1675 = (0.0968625 x dividend payout ratio) / [ 1 - (0.0968625 x dividend payout ratio))
0.1675 = 0.0968625 dividend payout ratio / (1 - 0.0968625 dividend payout ratio)
0.1675 - 0.016224469 dividend payout ratio = 0.0968625 dividend payout ratio
0.1675 = 0.113086969 dividend payout ratio
dividend payout ratio=1.481160928
Therefore, dividend payout ratio=1-1.481160928
dividend payout ratio=-48.12%
To calculate the Sustainable growth rate we would have to calcilate the following formula:
Sustainable growth rate=ROE*b/1-ROE*b
Sustainable growth rate=0.0968625*1.481160928/1-0.0968625*1.481160928
Sustainable growth rate=0.14346895/1-0.14346895
Sustainable growth rate=0.14346895/0.85653105
Sustainable growth rate=16.74%
