Given the Following Information: Profit Margin = 10%; Sales =

Multiple Choice

Given the following information: profit margin = 10%; sales = $100; retention ratio = 40%; assets = $200; equity multiplier = 2.0. If the firm maintains a constant debt-equity ratio and no new equity is
Used, what is the maximum growth rate? (Assume a constant profit margin.)

A) 2.04%
B) 2.34%
C) 3.68%
D) 4.17%
E) 5.93%