Question

the crash davis driving school has an roe of 13.7 percent and a payout ratio of 36 percent. what is its sustainable growth rate? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

Answer: The sustainable growth rate (g) can be calculated using the formula:

g = ROE x (1 - payout ratio)

Substituting the given values:

g = 0.137 x (1 - 0.36)

g = 0.08768 or 8.77%

Therefore, the sustainable growth rate for the Crash Davis Driving School is 8.77%.

Step-by-step explanation: