Marcie's Mercantile wants to maintain its current dividend policy, which is a payout ratio of 40 percent. The ﬁrm does not want to increase its equity ﬁnancing but are willing to maintain its current
Debt-equity ratio. Given these requirements, the maximum rate at which Marcie's can grow is equal
To:

Question

Quizplus · Accepted Answer

The maximum rate of growth that Marcie's Mercantile can achieve while maintaining its current dividend policy and debt-equity ratio is the sustainable rate of growth. This is because the sustainable rate of growth represents the rate at which a firm can grow without requiring external financing, which is consistent with the firm's desire to maintain its current equity financing level. Therefore, the correct answer is D, the sustainable rate of growth.

Marcie's Mercantile Wants to Maintain Its Current Dividend Policy, Which