United Financial Bancorp, Inc. had a return on equity of 8.5%. The corporation's earnings per share...
United Financial Bancorp, Inc. had a return on equity of 8.5%. The corporation's earnings per share was $1.20, its dividend payout ratio was 43 % . If these relationships continue, what will be United Financial Bancorp, Inc.'s sustainable growth rate?
|
5.25 % |
||
|
4.85 % |
||
|
4.28 % |
||
|
5.17 % |
Homework Answers
The sustainable growth rate is computed by using the below formula:
= return on equity x ( 1 - dividend payout ratio )
= 0.085 x ( 1 - 0.43 )
= 4.85% Approximately
So the correct answer is option of 4.85%
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