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Calculate the Sustainable Growth Rate

If a venture has a return on assets (ROA) = 10%, an equity multiplier based on beginning equity = 4.0 times, and a dividend payout ratio of 60%, the sustainable growth rate would be?

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The sustainable growth rate=return on equity*(1-dividend payout ratio). Likewise, return on ...

Solution Summary

Given the components of it, this solution illustrates how to compute the sustainable growth rate.