Question: Quesada Corporation reported net income of $4 million on sales of $100 million. It retained 50% of net income. A summary of Quesada's ending balance sheet (in millions) is shown below:

Current Assets $20 Current Liabilities $10

Long-Term Liabilities 20

Fixed Assets 40 Equity 30

Total $60 Total $60

The firm's beginning equity was $28.

Calculate the sustainable growth rate for Quesada Corporation, given the following changes to the data given in Problem 13 (assume beginning equity of $28 before equity repurchase):

1. Dividend payout is reduced to 40%.
2. Profit margin is increased to 6%.
3. The firm issues $10 of liabilities to repurchase $10 of equity at the beginning of the year.

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