Major Manuscripts, Inc. 2009 Income Statement

Net sales

7,700

Cost of goods sold

6,765

Depreciation

210

Earnings before interest and taxes

725

Interest paid

20

Taxable Income

705

Taxes

246

Net income

459

Dividends

207

Major Manuscripts, Inc. 2009 Balance Sheet

2009

2009

Cash

2,250

Accounts payable

1,700

Accounts rec.

870

Long-term debt

270

Inventory

2,200

Common stock (par & paid-in capital)

2,400

Total

5,320

Retained earnings

4,060

Net fixed assets

3,110

Total assets

8,430

Total liabilities & equity

8,430

If Major Manuscripts, Inc. decides to maintain a constant debt-equity ratio, what rate of growth can it maintain assuming that no additional external equity financing is available.

3.86%

3.71%

4.07%

4.17%

4.01%