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A firm has an ROE of 20% and a debt-equity ratio of 40%. If it wishes to grow by 9% a year without external financing,

A firm has an ROE of 20% and a debt-equity ratio of 40%. If it wishes to grow by 9% a year without external financing, what is the maximum proportion of earnings that it can pay out?

A. 40%

B. 12%

C. 37%

D. 16%

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