A Firm Has $80 Million in Equity and $40 Million

question 41

Multiple Choice

A firm has $80 million in equity and $40 million of debt,it pays dividends of 20% of net income,and has a net income of $10 million.What is the firm's sustainable growth rate?

• A)7%
• B)8%
• C)9%
• D)10%
• E)11%

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Definitions:

Government Corporation

A business owned by the government that operates with a degree of independence to provide services that could be commercial in nature.

Civil Service

The body of government employees who are employed on merit system principles, excluding military and political appointments.

Partisanship

Devotion or allegiance to a particular political party or cause, sometimes resulting in a polarized political environment.

Civil Service Commission

A government body charged with overseeing the hiring and management of federal government employees to ensure a merit-based, non-partisan civil service.