Major Manuscripts, Inc. 2009 Income Statement

Net sales

7,600

Cost of goods sold

6,665

Depreciation

210

Earnings before interest and taxes

725

Interest paid

21

Taxable Income

704

Taxes

245

Net income

459

Dividends

206

Major Manuscripts, Inc. 2009 Balance Sheet

2009

2009

Cash

2,150

Accounts payable

1,550

Accounts rec.

860

Long-term debt

280

Inventory

2,300

Common stock

2,500

Total

5,310

Retained earnings

4,000

Net fixed assets

3,020

Total assets

8,330

Total liabilities & equity

8,330

Major Manuscripts, Inc. does not want to incur any additional external financing. The dividend payout ratio is constant. What is the firm's maximum rate of growth?

Multiple Choice

• 2.54%

• 11.11%

• 3.12%

• 4.04%

• 3.15%