3 (a) Calculate the sustainable growth rate given the followinginformation: equity $500,000; total assets $600,000; net income$200,000; dividends paid $50,000?(B) Would the internal growth rate be higher or lower and by howmuch?Show calculations in detail.

Sustainable growth rate can be calculated by using this equation Sustainable growth rate =Return on…

Answered: (a) Calculate the sustainable growth…

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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(a) Calculate the sustainable growth rate given the following information: equity $500,000; total assets $600,000; net income $200,000; dividends paid $50,000? (B) Would the internal growth rate be higher or lower and by how much?