Tinsley, Incorporated, wishes to maintain a growth rate of 14 percent per year and a debt-equity ratio of 4. The profit margin is 6.7 percent, and the ratio of total assets to sales is constant at 1.64. 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 the nearest whole number, e.g., 32.) Answer is complete but not entirely correct. Payout ratio 15 % Is this growth rate possible? Yes No What is the maximum sustainable growth rate possible given these constraints? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. 5.72 % 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
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Tinsley, Incorporated, wishes to maintain a growth rate of 14 percent per year and a
debt-equity ratio of .4. The profit margin is 6.7 percent, and the ratio of total assets to
sales is constant at 1.64.
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 the nearest
whole number, e.g., 32.)
Answer is complete but not entirely correct.
Payout ratio
15 X %
Is this growth rate possible?
Yes
No
What is the maximum sustainable growth rate possible given these constraints? (Do not
round intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Answer is complete but not entirely correct.
5.72 %
Sustainable growth rate
Transcribed Image Text:Tinsley, Incorporated, wishes to maintain a growth rate of 14 percent per year and a debt-equity ratio of .4. The profit margin is 6.7 percent, and the ratio of total assets to sales is constant at 1.64. 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 the nearest whole number, e.g., 32.) Answer is complete but not entirely correct. Payout ratio 15 X % Is this growth rate possible? Yes No What is the maximum sustainable growth rate possible given these constraints? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. 5.72 % Sustainable growth rate
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