Taxes (40%) 1,520
Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 25 percent dividend payout ratio. No external equity financing is possible.
What is the sustainable growth rate?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
To calculate the sustainable growth rate, we first need to calculate the ROEROE = Net income / total equity=2280/21000=10.86%Plowback r1-payout=(1-.25)=75.00%Sustainable growth rate ==…