Assume costs and assets increase at the same rate as sales. Also assume 40% of net income is paid out in dividends, the current debt to equity ratio is optimal, and that no new equity sales are
Possible. Forecast the addition to retained earnings assuming the ﬁrm's sales increase at the
Maximum percent possible given these assumptions.
A) $43.2
B) $88.5
C) $113.3
D) $146.7
E) $167.8

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The Answer of Assume costs and assets increase at the same rate as sales. Also assume 40% of net income is paid out in dividends, the current debt to equity ratio is optimal, and that no new equity sales are
Possible. Forecast the addition to retained earnings assuming the ﬁrm's sales increase at the
Maximum percent possible given these assumptions.
A) $43.2
B) $88.5
C) $113.3
D) $146.7
E) $167.8

Assume Costs and Assets Increase at the Same Rate as Sales