Metronic under the current payout policy

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Metronic has $109M in equity and $67M in debt and forecasts $22M in net income for the year. It currently pays dividends equal to 34% of its net income. You are analyzing a potential change in payout policy -an increase in dividends to 25% of net income. How would this change affect your internal and sustainable growth rates?

a) What is the sustainable growth rate of Metronic under the current payout policy?

b) What is the internal growth rate of Metronic under the current payout policy?

c) What is the internal growth rate of Metronic under the considered payout policy?

d) What is the sustainable growth rate of Metronic under the considered payout policy?

Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"

Reference no: EM131545768

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