(Answered) Problemhow does a company assess its sustainable growth

Economics

Problem

How does a company assess its sustainable growth rate (SGR)?

• How doesa firm use the SGR in decisionmaking?
• What are the consequences for a firm that grows a higher rate than its SGR?
• What are the consequences for a firmthat grows at a lower rate than its SGR?

Consider the following ideas to include in your answer:

• Which variables are used in calculating the SGR?
• How doesa firmuse the SGR in choosing a financing option?
• How doesafirm finance a growth that is higher than its SGR?
• What is the opportunity cost for a firm that grows at a lower rate than its SGR?

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