The sustainable growth rate of a firm is best described as the A) minimum growth rate achiovable if the fim does not pay out any cash dividends B) minimum growth rate achievable if the firm maintains a constant equity multiplier. C) maximum growth rate achievable without external financing of any kind. D) maximum growth rate achievable without using any external equity financing while maintaining a constant debt-equity ratio.

The sustainable growth rate of a firm is best described as the A) minimum growth rate achiovable if the fim does not pay out any cash dividends B) minimum growth rate achievable if the firm maintains a constant equity multiplier. C) maximum growth rate achievable without external financing of any kind. D) maximum growth rate achievable without using any external equity financing while maintaining a constant debt-equity ratio.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter11: Risk-adjusted Expected Rates Of Return And The Dividends Valuation Approach

Section: Chapter Questions

Problem 6QE

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Which of the following is the correct definition for the sustainable growth rate? a. The maximum possible growth rate for a firm that issues no new equity and maintains its capital structure. b. The maximum possible growth rate for a firm that raises no external financing c. The maximum possible growth rate for a firm can sustain d. The maximum possible growth rate for a firm that issues no external financing and maintains a constant debt ratio. Please explain why the selections are true or fallse.
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