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9 November, 19:27

Wilt's has earnings per share of $2.98 and dividends per share of $0.35. 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%?

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  1. 9 November, 19:34
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    16.06%

    Explanation:

    According to the given situation the computation of sustainable rate of growth is shown below:-

    Sustainable Growth Rate = Return on equity * (1 - Dividend payout ratio)

    = 18.2% * (1 - 0.35 : 2.98)

    = 18.2% * (1 - 0.1174)

    = 16.06%

    Therefore for computing the sustainable rate of growth we simply applied the above formula.
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