P The Hunter Corp. HasAX+ search connect BUD 341 l Finance I Fall 2017 Alexander

Question

P The Hunter Corp. HasAX+ search connect BUD 341 l Finance I Fall 2017 Alexander Weaver Chapter 4 Long lem Hnancial lanning and Growth ) Instnucrions I help QuRsn(or 4 5.00 polnt Promt ma gn Equity mltiplie Payour ratio whal is, tha aitstainable growth ral {Do nnr round inramnadiaTA calculatina and nter your answer as a percent rounded to 2 decimal places, e.g 32.16. Suctairsbic growh a ReferenceseBook& Resources I caming Objerthe: 04-03 Tha determnants of a fims growth Te screershoi was added to your E O lype here to search

Explanation / Answer

ROE = Profit margin*Total asset turover*equity multiplier

ROE =3.40*6.3%*1.5 = 0.3213 = 32.13%

To find the sustainable growth rate, retention ratio

b = 1 – .30 b = 0.70

Sustainable growth rate = [(ROE)(b)] / [1 – (ROE)(b)]

Sustainable growth rate = [0.3213*(.70)] / [1 – 0.3213(.70)]

Sustainable growth rate = 0.2902 = 29.02%

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