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Determine the maximum sustainable growth rate

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Reference no: EM132833090

Question - Assume your retention rate for retained income is 0.75. If your return on assets is 18% and your return on equity is 25%.

Required -

a) Determine the maximum internal growth rate.

b) Determine the maximum sustainable growth rate.

c) Explain the differences on the debt to equity ratio when evaluating sustainable growth rate versus internal growth rate.

Reference no: EM132833090

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