A Firm Wants to Maintain a Growth Rate of 5

question 335

Multiple Choice

A firm wants to maintain a growth rate of 5% without incurring any additional equity financing. The firm maintains a constant debt-equity ratio of.4, a total asset turnover ratio of 1.15, and a profit margin of 7 percent. What must the retention ratio be?

• A) 42.3 %
• B) 50.0 %
• C) 53.9%
• D) 57.2%
• E) 61.3%

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