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A firm has a return on equity of 12%, a return on assets of 10%, a dividend payout ratio of 60%, and equity multiplier of
A firm has a return on equity of 12%, a return on assets of 10%, a dividend payout ratio of 60%, and equity multiplier of 1.6 , and a profit margin of 4.2%. What growth rate can the firm maintain if it is willing to allow the debt ratio to remain constant? a) 5.0% b) 2.9% c) 7.8% d) 6.8% e) 4.2%
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