A firm has a fixed debt-to-equity ratio and dividend policy. Assets and net income are proportional to sales, and new equity will not be issued. Which of the following statements is most correct?

Select one:

a. Almost any growth rate is theoretically possible.

b. The firm will go bankrupt.

c. The firm cannot grow.

d. The firm's growth rate must be less than some maximum.

e. Only one growth rate is possible.

2.

A firm's planning model has assets and cash proportional to sales. The firm maintains a constant dividend payout ratio and a constant debt to equity ratio. The firm's sustainable growth is _________ when the ratio of total assets to sales is ________.

Select one:

a. higher; lower

b. higher; higher

c. lower; lower

d. constant; higher

e. constant; lower

3.

A firm wishes to maintain a growth rate of 10% per year and a debt-to-equity ratio of 1/2. The dividend payout is 0.2, and the ratio of total assets to sales is constant at 1.2. What must the profit margin be?

Select one:

a. 6.31%

b. 8.00%

c. 9.09%

d. 10.00%

e. 11.11%

4.

A firm wishes to maintain a growth rate of 12% per year and a dividend payout of 10%. The ratio of total assets to sales is constant at 1.5, and profit margin is 10%. What must the debt-to-equity ratio be?

Select one:

a. 0.21

b. 0.52

c. 0.67

d. 0.79

e. 0.84