What Is the Sustainable Growth Rate for a Firm with Net

question 100

Multiple Choice

What is the sustainable growth rate for a firm with net income of $2.5 million,cash dividends of $1.5 million,and return on equity of 18%?

• A) 3.0%
• B) 5.4%
• C) 7.2%
• D) 10.8%

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Definitions:

Factor Price

The price paid for the use of a factor of production, such as labor, capital, or land.

Long-Run Total Cost

The total expenses incurred by a firm when all inputs, including both fixed and variable costs, are fully adjustable, reflecting the cost structure over time.

Profits Maximization

The process or strategy aimed at increasing the difference between the total revenue and total costs of a business to the highest possible level.

Price Received

The amount of money paid to a seller for the sale of goods or services.