Answer:
20.19%
Explanation:
The computation of the sustainable growth rate is shown below:
The Sustainable growth rate is
= (return on equity × b) ÷ (1 - (Return on equity × b))
= (0.21 × (1 - 0.20) ÷ (1 - (0.21 × (1 - 0.20)))
= 0.168 ÷ (1 - 0.168)
= 0.168 ÷ 0.832
= 20.19%
basically we applied the above formula to determine the sustainable growth rate
