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:

Social Cost

The total cost to society of an action, including both private costs borne by individuals and external costs absorbed by others.

Gallon

A unit of volume for liquid measure equal to four quarts, used in the United States and the United Kingdom.

Equilibrium Quantity

The quantity of goods or services supplied is equal to the quantity demanded at the market price.

Socially Optimal

A state or outcome that maximizes the overall welfare or benefit to society, often considered in economics and game theory to balance individual and collective interests.