Ask Question
22 May, 17:37

The Crash Davis Driving School has an ROE of 13.3 percent and a payout ratio of 32 percent. What is its sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

+5
Answers (1)
  1. 22 May, 18:06
    0
    9.94% (Approx).

    Explanation:

    Retention ratio=1 - payout ratio

    =1-0.32

    =0.68

    Sustainable growth rate = (ROE*Retention ratio) / [1 - (ROE*Retention ratio) ]

    = (0.133*0.68) / [1 - (0.133*0.68) ]

    =0.09044/0.90956

    =9.94% (Approx).
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The Crash Davis Driving School has an ROE of 13.3 percent and a payout ratio of 32 percent. What is its sustainable growth rate? (Do not ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers