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    Exam 18: Capital Structure and the Cost of Capital
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    If a Firm Pays Out 20% of Its Earnings as Dividends
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If a Firm Pays Out 20% of Its Earnings as Dividends

Question 2

Question 2

Multiple Choice

If a firm pays out 20% of its earnings as dividends and has averaged a 20 percent return on equity, how quickly can the firm grow while maintaining a constant debt to equity mix?


A) 6.4%.
B) 10.2%.
C) 16.3%.
D) 19.0%.

Correct Answer:

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