Question: Use the sustainable growth rate equations from the previous problem
Use the sustainable growth rate equations from the previous problem to answer the following questions. No Return, Inc., had total assets of $380,000 and equity of $230,000 at the beginning of the year. At the end of the year, the company had total assets of $430,000. During the year the company sold no new equity. Net income for the year was $95,000 and dividends were $43,000. What is the approximate sustainable growth rate for the company? What is the exact sustainable growth rate? What is the approximate sustainable growth rate if you calculate ROE based on the beginning of period equity? Is this number too high or too low? Why?
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