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"ROE" means return on equity and "b" means the retention ratio.The formula is:Sustainable growth rate = (ROE × b) / [1 – (ROE × b)].12=Sustainable growth rate and .70=b. Here's the numbers plugged into the formula: .12 = [ROE(.70)] / [1 – ROE(.70)]I have to solve for ROEThe answer is:ROE = .1531 or 15.31%My question: HOW THE h**l DID MY PROFESSOR GET THAT ANSWER?
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