A firm has $60 million in equity and $40 million of debt, it pays dividends of 20% of net income, and it has a net income of $20 million. What is the firm's sustainable growth rate? O 4.00% O 6.67% O 13.33% O 16.00% 26.67%
A firm has $60 million in equity and $40 million of debt, it pays dividends of 20% of net income, and it has a net income of $20 million. What is the firm's sustainable growth rate? O 4.00% O 6.67% O 13.33% O 16.00% 26.67%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A firm has $60 million in equity and $40 million of debt, it pays
dividends of 20% of net income, and it has a net income of $20
million. What is the firm's sustainable growth rate?
O 4.00%
O 6.67%
O 13.33%
O 16.00%
O 26.67%
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