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Wilt's has earnings per share of $2.98 and dividends per share of $.35. What is the firm's sustainable rate of growth if its return on assets is 14.6% and its return on equity is 18.2%?A. 2.14%B. 1.71%C.
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Wilt's has earnings per share of $2.98 and dividends per share of $.35. What is the firm's sustainable rate of growth if its return on assets is 14.6% and its return on equity is 18.2%?A. 2.14%B. 1.71%C. 12.89%D. 16.06%

User Aseferov
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1 Answer

1 vote

Answer:

D. 16.06%

Step-by-step explanation:

Calculation to determine the firm's sustainable rate of growth using this formula

Sustainable growth rate = ROE * plowback ratio

Let plug in the formula

Sustainable growth rate = 182* ( ($2.98- .35)/$2.98)

Sustainable growth rate = .1606*100

Sustainable growth rate =16.06%

Therefore the firm's sustainable rate of growth is 16.06%

User Joko
by
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