Based on the following information,what is the sustainable growth rate of Hendrix Guitars,Inc.?

Question

Quizplus · Accepted Answer

The sustainable growth rate (SGR) can be calculated using the formula:

SGR = ROE x (1 - Dividend payout ratio)

- ROE (return on equity) is given as 16%
- Dividend payout ratio is given as 40%

Therefore,

SGR = 0.16 x (1 - 0.40) = 0.096 or 9.52%

So, the best choice is B) 9.52 percent as it is the rounded SGR calculated from the given information.

Based on the Following Information,what Is the Sustainable Growth Rate