Eagle Enterprises Inc., has an asset turnover of 1.1, a financial leverage ratio of 1.67, a profit margin of 12% and a dividend payout ratio of 25%. What is the firm's sustainable growth rate?
A) 29.39%
B) 14.07%
C) 5.51%
D) 16.53%
D
Explanation: D) Sustainable Growth = ROE * b = (12% * 1.1 * 1.67 ) * (1 - 0.25 ) = 16.53%
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