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The Sustainable Growth Rate Is Based on the Premise That

Question 27

Multiple Choice

The sustainable growth rate is based on the premise that:


A) an additional dollar of debt will be acquired only if an additional dollar in equity shares is issued.
B) no additional equity will be added to the firm.
C) the debt-equity ratio will be held constant.
D) the dividend payout ratio will be zero.
E) the dividend payout ratio will increase at a steady rate.

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