The Sustainable Growth Rate Is Defined as the Maximum Rate

question 90

Multiple Choice

The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions?

• A)No new external financing of any kind
• B)No new debt but additional external equity equal to the increase in retained earnings
• C)New debt and external equity in equal proportions
• D)New debt and external equity, provided the debt-equity ratio remains constant
• E)No new external equity and a constant debt-equity ratio

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