Estimate the sustainable growth rate (g) of a firm that sells for $40 per share, is expected to provide a dividend of $2.90 next year, and has recently provided 8% required returns on its stocks (r=8%).

If the formula is g=ROE X plowback ratio = ROE X (1-payout ratio) How would you set up the formula to put the right numbers in?

Answer rating: 100% (QA)

To estimate the sustainable growth rate g of a firm you can use the formula g ROE Plowback Ratio I... View the full answer