Question

Country Comfort, Inc. had Total Assets of $195,000 and Total Equity of $149,903 at the end of the year. During the year, the company sold no new equity. Net income for the year was $71,715 and dividends were $38,586. What is the sustainable growth rate at the end of the year? Present your answer in percentage format with two decimal places.

Answer 1

	Country Comfort, Inc.
	Total Assets	$ 1,95,000.00
	Equity at the end of the year	$ 1,49,903.00
	Net Income	$     71,715.00
	Dividend	$     38,586.00
	Return on Equity=(Net Income/Equity)
	Return on Equity=($71715/$149903)	0.478409371
	Retention Ratio=(Net Income-Dividend)/Net Income
	Retention Ratio=($71715-$38586)/$71715	0.461953566
	Sustainable growth rate=(Return on equity* Retention ratio)/((1-(Return on equity* Retention ratio))
	Sustainable growth rate=(.478409*.461954)/((1-(.478409*.461954))	28.37%