Your firm has an roe of 120 a payout ratio of 25 600000 of, Ask an Expert

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Your firm has an ROE of 12.0%, a payout ratio of 25%, $600,000 of stockholder's equity, and $400,000 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue? The sustainable growth rate is %? The ending total assets at the sustainable growth rate will be $? Because the firm grew at its sustainable growth rate, its debt/equity ratio remains constant at 0.666667 and the debt-to-assets ratio will be 0.4. Thus, the new debt in the capital structure will be 0.4x$1,0900,000=$436,000. Since the firm started at $400,000, it will issue about $36,000 in additional debt. is the above statement true or false?

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Financial Management, Finance

Category:- Financial Management
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