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A company's net income is USD150,000 out of which, 60% will be distributed as dividends. The total assets of the company amounted to USD600,000 and the total equity amounted to USD250,000. a. Based on the above, calculate the sustainable growth rate of the company as well as its internal growth rate. b. Explain the difference between the two (sustainable growth rate and internal growth rate).

A company's net income is USD150,000 out of which, 60% will be distributed as dividends. The total assets of the company amounted to USD600,000 and the total equity amounted to USD250,000. a. Based on the above, calculate the sustainable growth rate of the company as well as its internal growth rate. b. Explain the difference between the two (sustainable growth rate and internal growth rate).

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
8th Edition
ISBN:9781285065137
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter3: Financial Statements, Cash Flow, And Taxes
Section: Chapter Questions
Problem 4DQ
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Question 4: A company's net income is USD150,000 out of which, 60% will be distributed as dividends. The total assets of the company amounted to USD600,000 and the total equity amounted to USD250,000. a. Based on the above, calculate the sustainable growth rate of the company as well as its internal growth rate. b. Explain the difference between the two (sustainable growth rate and internal growth rate). C.
Transcribed Image Text:Question 4: A company's net income is USD150,000 out of which, 60% will be distributed as dividends. The total assets of the company amounted to USD600,000 and the total equity amounted to USD250,000. a. Based on the above, calculate the sustainable growth rate of the company as well as its internal growth rate. b. Explain the difference between the two (sustainable growth rate and internal growth rate). C.
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