Consider a firm with $3 million in total assets, $400,000 in net income, and $150,000 in dividend payments. Calculate the maximum rate of growth in sales that can be obtained without tapping external sources of funds. Next, compute the growth rate if the dividend payout ratio is reduced to 20%. Do your answers suggest that shareholders must be willing to trade dividends for growth?

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The Answer of Consider a firm with $3 million in total assets, $400,000 in net income, and $150,000 in dividend payments. Calculate the maximum rate of growth in sales that can be obtained without tapping external sources of funds. Next, compute the growth rate if the dividend payout ratio is reduced to 20%. Do your answers suggest that shareholders must be willing to trade dividends for growth?

Consider a Firm with $3 Million in Total Assets, $400,000