Not use ai please don't You have located the following information onRock Company: debt ratio=40%, capitalintensity ratio = 2.25 times, profit margin = 8%,and dividend payout ratio = 25%.a. What is the return on equity for Rock?b. What is the sustainable growth rate for Rock?

b.) Retention Ratio (RR) = 1 - Dividend Payout Ratio = 1 - .25 = .75 Sustainable Growth Rate = (ROE…

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Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 5MC

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You have located the following information on Rock Company: debt ratio = 40%, capital intensity ratio = 2.25 times, profit margin = 8%, and dividend payout ratio = 25%. a. What is the return on equity for Rock? b. What is the sustainable growth rate for Rock?