24.
The sustainable growth rate of a firm is best described as
the
minimum growth rate achievable, assuming a 100 percent retention
ratio.
minimum growth rate achievable if the firm maintains a constant
equity multiplier.
maximum growth rate achievable, excluding external financing of
any kind.
maximum growth rate achievable, excluding any external equity
financing while maintaining a constant debt-equity ratio.
maximum growth rate achievable with unlimited debt
financing.
None of the options are correct.
25.
Which of the following statements...
Joker stock has a sustainable growth rate of 9 percent, ROE of
17 percent, and dividends per share of $1.55. If the P/E ratio is
15.5, what is the value of a share of stock? (Do not round
intermediate calculations. Round your answer to 2 decimal places.
Omit the "$" sign in your response.)
Share of stock $________
Joker stock has a sustainable growth rate of 9 percent, ROE of
15 percent, and dividends per share of $3.15. If the P/E ratio is
19.7, what is the value of a share of stock? (Do not round
intermediate calculations. Round your answer to 2 decimal
places.)
If a firm grows faster than its sustainable growth rate, is that
growth value decreasing? Explain
NOTE: This question has two parts, first: is the rate value
decreasing, and second explain your answer.
Stockholders of a firm expect a 12% growth rate on their stock.
Management believes that ROE will be 12% for the next 5 years.
Given this information, the firms dividend payout ratio (one minus
plow back ratio) for this period is
A. 100%
B. 0%
C. between 0% and 50%
D. between 50% and 100%
Calculate the sustainable growth rate for Big Falls Timber
given the following information. Dividend payout ratio is 30%; Tax
rate is 21%; Total debt is $424,500 and Total assets are $913600;
Profit Margin ratio is 11.08%; and Sales of $848,375.45
How does a company assess its sustainable growth rate (SGR)?
· How does a firm use
the SGR in decision making?
· What are the
consequences for a firm that grows a higher rate than its SGR?
· What are the
consequences for a firm that grows at a lower rate than its
SGR?
Consider the following ideas to include in your answer:
· Which variables are
used in calculating the SGR?
· How does a firm use
the SGR...