What is the sustainable growth rate

Assignment Help Financial Management
Reference no: EM131179616

Last year Lakesha’s Lounge Furniture Corporation had an ROE of 15.8 percent and a dividend payout ratio of 29 percent. What is the sustainable growth rate? What is the sustainable growth rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131179616

Questions Cloud

Calculate its weighted average cost of capital : Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm for the following: A bond that has a $1,000 par value (face value) and a co..
How many shares remain outstanding after recapitalization : The firm is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, the bonds can be sold at a cost, rd, of 7%. Rivoli is a no-growth firm and all of its ea..
Operations benefits from appreciation of firm local currency : Which of the following operations benefits from appreciation of the firm's local currency
Projected cash flow-what is discounted payback period : The questions states: "XYZ facility wants to buy equipment for $100,000 with projected cash flow of $22000 per year during equipment useful life of 5. What is the discounted payback period?" How can I found the discounted payback period if I'm not gi..
What is the sustainable growth rate : Last year Lakesha’s Lounge Furniture Corporation had an ROE of 15.8 percent and a dividend payout ratio of 29 percent. What is the sustainable growth rate? What is the sustainable growth rate?
A firm with total asset beta : A firm with a total asset beta of 0.3 has a third of its assets as excess cash, which is not used in the operations of the firm and is invested in risk free T-bills. suppose it pays half of its cash to shareholders and invests the other half in the m..
A sunk cost has no impact on evaluation of capital project : One source of potential conflict between bond and stockholders is the amount of liquidity the company should maintain. It was recommended to have a consistent and upward moving dividend policy if the firm is in the maturity stage of operations. A sun..
Calculate in yen amounts : Assume you have $1,000,000 U.S dollars that you can invest for the next 180 days. In which country would you invest your $1.0 million if you decided to use the forward market? What would be the dollar amount in after investment in Japan and in the U...
Assets of the firm are transferred to the debt-holders : Default is a legal procedure where the assets of the firm are transferred to the debt-holders. Agency problems exist when the company is owned and managed by an individual or group of individuals who work for their best interest, but reduce the value..

Reviews

Write a Review

Financial Management Questions & Answers

  Management contract with its newly hired president

The Great Giant Corp. has a management contract with its newly hired president. The contract requires a lump sum payment of $25,100,000 be paid to the president upon the completion of her first 7 years of service. The company wants to set aside an eq..

  Maintain constant growth rate in its dividends

Suppose you know that a company’s stock currently sells for $65.30 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. Require..

  Compounded daily to accumulate money for his down payment

John plans to buy a vacation home in 7 years from now and wants to have saved $39,772 for a down payment. How much money should he place today in a saving account that earns 8.75 percent per year (compounded daily) to accumulate money for his down pa..

  Managing a pension fund with a value

You are managing a pension fund with a value of $390 million and a beta of 1.5. You are concerned about a market decline and wish to hedge the portfolio. You have decided to use SPX calls. How many contracts do you need if the delta of the call optio..

  How market risk is measured for individual securities

Describe how market risk is measured for individual securities. How are beta coefficients calculated? Calculate beta using the following historical returns for the stock market and for another company.

  Present value of all the future property tax payments

Property taxes in a particular district are 4% of the purchase price every year. If you just purchased a $250,000 home, what is the present value of all the future property tax payments? Assume that the house remains worth $250,000 forever, property ..

  Contrast mature profitable firms with stable cash flows

Compare and contrast mature profitable firms with stable cash flows with firms with higher risk (dependencies on economy) with unstable cash flows. What risks do they take in regards to leverage use, tax shields and trading information between manage..

  What is current share price-earnings to fuel growth

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $12 per share dividend in 10 years and will..

  Increase the market value of a call option

A(n) ____ will increase the market value of a call option.

  Dividend is expected to increase

A firm recently paid a $0.65 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be $30. If the required return for this stock is 13.5 percent, what is..

  Explain four variables of the optimal financial structure

Debt can be a double-edged sword, depending upon the interest rates and the return on the investment. Debt is generally part of a company's financial structure. The upcoming discussion topic is about the financial structures of MNEs.

  Opportunities of equal risk

G Corporation is considering acquiring a newer, more modern machine. The machine, which requires an initial outlay of $4.5 million, will generate cash flows of $1.1 million at the end of each year for 5 years. Investors could earn 7.5 percent elsewhe..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd