Dynamo Engines Inc., has an ROA of 10%, a profit margin of 6%, an assets to equity ratio of 1.30, and a retention ratio of 0.70. What is the firm's sustainable growth rate?
A) 18.57%
B) 9.10%
C) 5.46%
D) 0.55%
B
Explanation: B) Sustainable Growth = ROE * b = (10% * 1.30 ) * 0.70 = 9.10%.
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