What Is the Maximum Dividend Payout Ratio Consistent with Not

question 12

Multiple Choice

What is the maximum dividend payout ratio consistent with not requiring external funds for a firm with an ROE of 15%, a debt-equity ratio of 50%, and an annual sales growth objective of 9%?

• A)Approximately 1%
• B)Approximately 10%
• C)Approximately 12%
• D)Approximately 20% If debt-equity ratio = .5, then 1/3 of the firm is debt financed and 2/3 of the firm is equity financed.
• And 2/3 = 66.67%
• Internal growth rate =

---

Definitions:

Formal Operations

The fourth and final stage of Jean Piaget's theory of cognitive development, characterized by the ability to think abstractly, reason logically, and manage hypothetical situations.

Cognitive Development

The process by which a child learns to reason, solve problems, and understand concepts throughout different stages of early life.

Group Discussions

A form of communicative interaction among a small group of individuals, focusing on a predefined subject, with the aim of sharing information, solving problems, or generating ideas.

Cognitive Development

The process of growth in intellectual abilities such as thinking, reasoning, and problem-solving.