(Q. 12 IN B) WHAT PROPORTION OF EARNINGS IS BEING RETAINED BY THE...

17. (Q. 12 in B) What proportion of earnings is being retained by the firm if the

sustainable growth rate is 8 percent and the firm's ROE is 20 percent?

A) 8%

B) 12%

C) 20%

D) 40%

Answer D

8% = 20% × plowback

40% = plowback