Assume Costs and Assets Increase at the Same Rate as Sales

question 133

Multiple Choice

Assume costs and assets increase at the same rate as sales. Also assume 40% of net income is paid out in dividends. What is the maximum growth rate achievable assuming no external debt or equity is available?

• A) 11.2%
• B) 25.4%
• C) 35.8%
• D) 51.6%
• E) 111.8%

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Definitions:

Indifference Curve

A graph showing different bundles of goods, each measured as to quantity, between which a consumer is indifferent.

Slope

In mathematics, the measure of the steepness or incline of a line, typically defined as the ratio of the vertical change to the horizontal change.

Utility Function

An economic concept that measures preferences over a set of goods and services, reflecting satisfaction or happiness.

Indifference Curve

A graphical representation in microeconomic theory of all possible bundles of goods between which a consumer is indifferent, showing preferences of equal utility.