A firm generated $697,000 in Sales Revenue, on which it earned Net Income of $139,400. The firm maintains a constant 40% dividend payout ratio. It ended the year with $1,499,000 in Total Assets, $599,600 in Total Liabilities, and $899,400 in Total Equity. At what annual rate can the firm grow if is is willing to issue additional debt, but not additional equity, and it does not want to change its debt- to-equity relationship? (Enter your answer to the nearest tenth of a percent. Do not enter the percentage symbol. For example, If your answer is 123.456789%, enter 123.5.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
Problem 15P
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A firm generated $697,000 in Sales Revenue, on which it earned Net Income of $139,400. The firm
maintains a constant 40% dividend payout ratio. It ended the year with $1,499,000 in Total Assets,
$599,600 in Total Liabilities, and $899,400 in Total Equity. At what annual rate can the firm grow if it
is willing to issue additional debt, but not additional equity, and it does not want to change its debt-
to-equity relationship? (Enter your answer to the nearest tenth of a percent. Do not enter the
percentage symbol. For example, If your answer is 123.456789%, enter 123.5.)
Transcribed Image Text:A firm generated $697,000 in Sales Revenue, on which it earned Net Income of $139,400. The firm maintains a constant 40% dividend payout ratio. It ended the year with $1,499,000 in Total Assets, $599,600 in Total Liabilities, and $899,400 in Total Equity. At what annual rate can the firm grow if it is willing to issue additional debt, but not additional equity, and it does not want to change its debt- to-equity relationship? (Enter your answer to the nearest tenth of a percent. Do not enter the percentage symbol. For example, If your answer is 123.456789%, enter 123.5.)
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