A Firm Wishes to Maintain a Growth Rate of 8

Multiple Choice

A firm wishes to maintain a growth rate of 8 percent and a dividend payout ratio of 62 percent.The ratio of total assets to sales is constant at 1,and the profit margin is 10 percent.What must the debt-equity ratio be if the firm wishes to keep that ratio constant?

A) 0.05
B) 0.40
C) 0.55
D) 0.60
E) 0.95