A Firm Has Adopted a Policy Whereby It Will Not

question 44

Multiple Choice

A firm has adopted a policy whereby it will not seek any additional external financing.Given this, what is the maximum growth rate for the firm if it has net income of $32,600, total equity of $294,000, total assets of $503,000, and a 25 percent dividend payout ratio?

• A)5.11 percent
• B)4.88 percent
• C)6.62 percent
• D)7.67 percent
• E)8.37 percent

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Definitions:

Budget Constraint

The limit on the consumption bundles that a consumer can afford

Income Decrease

A reduction in the amount of money received by an individual or entity, affecting purchasing power and savings.

Budget Constraint

The limits imposed on household choices by income, wealth, and product prices.

Relative Price

The price of a good or service in comparison to the price of other goods and services.