Plank’s Plants had net income of \($2,000\) on sales of \($40,000\) last year.

The firm paid a dividend of \($500.\) Total assets were \($100,000,\) of which \($40,000\) was financed by debt.

a. What is the firm’s sustainable growth rate?

b. If the firm grows at its sustainable growth rate, how much debt will be issued next year?

c. What would be the maximum possible growth rate if the firm did not issue any debt next year?