Multiple Choice
Suppose that assets and costs maintain a constant ratio to sales. The firm retains 30% of earnings. If the firm is producing at full capacity, what is the maximum growth rate (assuming no equity sales) that will maintain a constant debt-equity ratio?
A) 5.2%
B) 15.6%
C) 18.8%
D) 21.0%
E) 29.2%
Correct Answer:
Verified
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