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What Proportion of Earnings Is Being Plowed Back into the Firm

Question 74

Multiple Choice

What proportion of earnings is being plowed back into the firm if the sustainable growth rate is 8 percent and the firm's ROE is 20 percent?

A) 8 percent
B) 12 percent
C) 20 percent
D) 40 percent 8% = 20% x plowback

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