If a Firm Bases Its Growth Projection on the Rate

Multiple Choice

If a firm bases its growth projection on the rate of sustainable growth,shows positive net income,and has a dividend payout ratio of 30 percent,then the:

A) fixed assets will have to increase at the sustainable growth rate,even if the firm is currently operating at only 78 percent of capacity.
B) number of common shares outstanding will increase at the same rate of growth.
C) debt-equity ratio will have to increase.
D) debt-equity ratio will remain constant while retained earnings increase.
E) fixed assets,the debt-equity ratio,and number of common shares outstanding will all increase.