Most of us have seen the equations for sustainable growth. In particular, the growth in earnings per share = (1 - payout ratio) * Return on equity.
a.     Can you use the same equation to compute growth in operating income?
b.     Under what assumptions will this sustainable growth rate also be equal to your expected growth rate?
c.     Increasing the amount you reinvest back into the business (reduce the payout ratio) will increase the growth rate for any company which makes a profit on its projects. Will it also increase value?

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