The Raindrop Company has an ROE of 12.1 percent and a payout ratio of 25 percent. a.
Question:
The Raindrop Company has an ROE of 12.1 percent and a payout ratio of 25 percent.
a. What is the company’s sustainable growth rate?
b. Can the company’s actual growth rate be different from its sustainable growth rate? Why or why not?
c. How can the company increase its sustainable growth rate?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 58% (12 reviews)
a The plowback ratio is one minus the dividend payout ratio so b 1 25 b 75 Now we can use the sustai...View the full answer
Answered By
HABIBULLAH HABIBULLAH
I have been tutor on chegg for approx 5 months and had solved a lot of questions.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Corporate Finance
ISBN: 978-1259918940
12th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Question Posted:
Students also viewed these Business questions
-
The current risk-free rate is 3 percent and the market risk premium is 5 percent. You are trying to value ABC company and it has an equity beta of .9. The company earned $2.50 in the year that just...
-
If Williams, Inc., has an ROA of 7.2 percent and a payout ratio of 25 percent, what is its internal growth rate?
-
Your firm has an ROE of 12%, a payout ratio of 25%, $600,000 of stockholders equity, and $400,000 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you...
-
The ABC Company has a cost of equity of 24.76 percent, a before-tax cost of debt of 5.37 percent, and a tax rate of 26 percent. What is the firm's weighted average cost of capital if the proportion...
-
A quantity of 7.480 g of an organic compound is dissolved in water to make 300.0 mL of solution. The solution has an osmotic pressure of 1.43 atm at 27C. The analysis of this compound shows that it...
-
Migrating geese tend to travel in straight-line paths at approximately constant speed. A goose flies 32 km south, then turns to fly 20 km west. How far is the goose from its original position?
-
What is the internal rate of return of the following cash flow diagram? a. 20 percent b. 18.2 percent c. 17.5 percent d. 15 percent $30 $31 0 1 2 3 $30 $15
-
The CVP income statements shown below are available for Armstrong Company and Contador Company. Instructions (a) Compute the degree of operating leverage for each company and interpret your results....
-
28. Below is the model of a three-dimensional structure. Draw the front view of this model. Each cube is exactly inch in length, width, and height. Use a scale of 2:1. (2 marks) Back Top Front Left...
-
Letty is hired as a Sales Executive and her role is to sell items which are given to her in a bag. The bag contains n items where each item has an associated ID. Letty is inherently lazy and plans to...
-
Dahlia Colby, CFO of Charming Florist Ltd., has created the firms pro forma balance sheet for the next fiscal year. Sales are projected to grow by 12 percent to $320 million. Current assets, fixed...
-
Firm A and Firm B have debt-total asset ratios of 35 percent and 45 percent, respectively, and returns on total assets of 8 percent and 7 percent, respectively. Which firm has a greater return on...
-
Determine the magnitude of the force P and the orientation of the 200-lb force required to keep the particle in equilibrium. (-1 ft, -7 ft, 4 ft) F3= 200 lb X N F=360 lb F= 120 lb 20 F = 300 lb P y
-
In July 2016, ABC Rural reported that a more environmentally friendly and less costly water-jet technology is being developed to compete with hydraulic fracturing in which water, sand, and chemicals...
-
A system's transfer function is given as \[\frac{Y(s)}{U(s)}=\frac{s^{2}(2 s+1)}{\frac{1}{3} s^{3}+s^{2}+s+2}\] a. Find the state-space form. b. Find the transfer function from (a).
-
The inverse market demand curve for a final good is \(P=50-Q\) and the marginal cost of supplying labor is \(M C_{L}=20\). Each unit of output requires half a unit of labor, \(L\), and no other...
-
How does a monopoly's demand for labor change if a second firm enters its output market and the result is a Stackelberg duopoly equilibrium, where the former monopoly becomes the Stackelberg leader?...
-
The inverse market demand curve for a final good is \(P=50-Q\) and the wage rate is \(w=20\). Each unit of output requires half a unit of labor, \(L\), and no other factor, \(Q=2 L\). If factor and...
-
The purchases journal of Lightning Snowboards follows: Required 1. Open three-column general ledger accounts for Inventory (account #131), Supplies (account #141), Equipment (account #171), and...
-
Sandcastles, Inc.s management has recently been looking at a proposal to purchase a new brick molding machine. With the new machine, the company would not have to buy bricks. The estimated useful...
-
Equivalent Annual Cost When is EAC analysis appropriate for comparing two or more projects? Why is this method used? Are there any implicit assumptions required by this method that you find...
-
Equivalent Annual Cost When is EAC analysis appropriate for comparing two or more projects? Why is this method used? Are there any implicit assumptions required by this method that you find...
-
Cash Flow and Depreciation When evaluating projects, were concerned with only the relevant incremental after tax cash flows. Therefore, because depreciation is a noncash expense, we should ignore its...
-
Joanna, a head of investment manager holds a portfolio with a current value of RM20 million. Joanna fear that the market might be heading for a short-term volatility and wishes to enter the KLCI...
-
Balance sheet of High Capital Bank Capital Bank Assets $ Liabilities Balance sheet of Los Liabilities $ Assets $ A $ Reserves 8 m Deposits 90 Reserves 10 m Deposits 94 m Loans 92 m Equity Capital...
-
What is the Present Value (intrinsic value) of the stock today (Po)? If Stock A has a market price today of 42,000 JPY and Stock B has a market price of 50,000 today are they overvalued or...
Study smarter with the SolutionInn App