The image contains a problem statement regarding the calculation of a company's sustainable growth rate.**Text:**"The Cornelius Company has an ROE of 14.8 percent and a payout ratio of 40 percent. What is the company's sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)"There is also a field for input:"Sustainable growth rate: [____] %"**Explanation:**The problem involves finding the sustainable growth rate of the company, which can be calculated using the formula:\[ \text{Sustainable Growth Rate} = \text{ROE} \times (1 - \text{Payout Ratio}) \]- ROE (Return on Equity) is given as 14.8%.- The payout ratio is given as 40%.To solve for the sustainable growth rate, you subtract the payout ratio from 1 and multiply the result by the ROE. Then, input this final percentage value as a rounded figure to two decimal places in the provided field.

A maximum growth rate that a company expects to sustain in the long run is term as the sustainable…

The Cornelius Company has an ROE of 14.8 percent and a payout ratio of 40 percent. What is the company's sustainable growth rate? (Do not round Intermedlate calculations an enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate

The Cornelius Company has an ROE of 14.8 percent and a payout ratio of 40 percent. What is the company's sustainable growth rate? (Do not round Intermedlate calculations an enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate

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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Similar questions

man.2
The following information is available regarding XYZ Co. sales = $250,000net income = $35,000dividends = $10,000total debt = $100,000total equity = $80,000 What growth rate can be supported without outside financing?
XYZ Corp. is anticipating a sustained growth rate of 15% per year. Is it possible for them to achieve this growth rate given the following numbers. Debtequity ratio of 0.40 times Profit margin is 5.3 percent Capital Intensity Ratio is 0.75 times To answer: determine what the dividend payout ratio must be. How do you interpret the result? no excel plz
Mummy Steak House has a return on assets (ROA) of 10.9%, a return on equity (ROE) of 16.7%, and a retention ratio of 60%. Calculate the firm’s sustainable growth rate. Select one: a. 4.56% b. 7.00% c. 7.16% d. 11.14%
Question: Growth and Profit Margin - Dante Co. wishes to maintain a growth rate of 12 percent per year, a debt-equity ratio of .85, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .95. What profit margin must the firm achieve? Question: Sustainable Growth Rate - You have located the following information on Rock Company: debt ratio = 45%, capital intensity ratio = 2.45 times, profit margin = 18%, and dividend payout ratio = 35%. What is the sustainable growth rate for Rock?
6) Needham Pharmaceuticals has a profit margin of 2% and an equity multiplier of 2.0. Its sales are $110 million and it has total assets of $50 million. What is its return on equity (ROE)? Do not round intermediate calculations. Round your answer to two decimal places.
Determine the percentage increase in annual operating income if Pharoah Corporation increases its selling price by 20% and all other factors (including demand) remain constant. ( Round answer to 2 decimal places, e.g. 15.25% .) Percent increase in profit %
1.A Assume that a Peruvian company, DMB LLC, just reported its earnings this year. The reported revenue was $10 million and the reported cost was $9 million. The discount rate is 8%. Mark ALL the CORRECT statements. For this question, profit = revenue - cost. Hint: Apply the Gordon Formula to the profits of the firm. a) If the profit is expected to be constant, the present value of all the company's future profits is $125 million. b) If the profit is expected to grow 3% annually, the present value of all the company's future profits is $20 million. c) If the profit is expected to grow 4% annually, the present value of all the company's future profits is $25.75 million. d) If the profit is expected to grow 6% annually, the present value of all the company's future profits is $50 million. e) If the profit is expected to grow 10% annually, the present value of all the company's future profits is negative.
Tinsley, Incorporated, wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .5. The profit margin is 5.2 percent, and the ratio of total assets to sales is constant at 1.61. What dividend payout ratio is necessary to achieve this growth rate under these constraints? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)What is the maximum growth rate possible? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
A firm has an asset turnover ratio of 5.0. Its plowback ratio is 50%, and it is all-equity-financed. If the profit margin of the firm is 3%, what is the maximum payout ratio that will allow it to grow at 5% without resorting to external financing? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Maximum payout ratio %
If A7X Company has an ROA of 14 percent and a payout ratio of 16 percent, what is its internal growth rate?
Growers Inc. has a market capitalization (k) of 14%, and expects earnings next period of $3/share (i.e., in t=1). Growers can earn 15% on new investment (ROE), and plans to plowback 75% of earnings. What is Growers' PVGO? a. $3.94 b. $5.84 c. $10.91

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