Chadron Motors has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.8 and the debt-equity ratio is .4. What is the sustainable rate of growth? A. 9.17 percent B. 9.84 percent C. 11.21 percent D. 10.52 percent E. 8.51 percent
Chadron Motors has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.8 and the debt-equity ratio is .4. What is the sustainable rate of growth? A. 9.17 percent B. 9.84 percent C. 11.21 percent D. 10.52 percent E. 8.51 percent
Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
Problem 13P
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Chadron Motors has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.8 and the debt-equity ratio is .4. What is the sustainable rate of growth?
- A. 9.17 percent
- B. 9.84 percent
- C. 11.21 percent
- D. 10.52 percent
- E. 8.51 percent
Chadron Co. wishes to maintain a growth rate of 9.89 percent a year, a constant debt-equity ratio of .42, and a dividend payout ratio of 40 percent. The ratio of total assets to sales is constant at 1.36. What profit margin must the firm achieve?
- A. 13.73 percent
- B. 14.37 percent
- C. 8.13 percent
- D. 14.79 percent
- E. 13.31 percent
Chadron Markets is operating at full capacity with a sales level of $547,200 and fixed assets of $560,000. The profit margin is 5.4 percent. What is the required addition to fixed assets if sales are to increase by 4 percent?
- A. $14,680
- B. $10,709
- C. $18,840
- D. $16,760
- E. $22,400. Please answer complete
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