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siniylev [52]
3 years ago
15

If the Synyster Corp. has an ROE of 21 percent and a payout ratio of 20 percent, what is its sustainable growth rate?

Business
1 answer:
Lynna [10]3 years ago
6 0

Answer:

20.19%

Explanation:

The computation of the sustainable growth rate is shown below:

The Sustainable growth rate is

= (return on equity × b) ÷ (1 - (Return on equity × b))

= (0.21 × (1 - 0.20) ÷ (1 - (0.21 × (1 - 0.20)))

= 0.168 ÷ (1 - 0.168)

= 0.168 ÷ 0.832

= 20.19%

basically we applied the above formula to determine the sustainable growth rate

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