Solution-What is the maximum possible dividend payout rate

What is the maximum possible dividend payout rate the firm

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Reference no: EM132528596

An all-equity-financed firm plans to grow at an annual rate of at least 20%. Its return on equity is 32%.

Question 1: What is the maximum possible dividend payout rate the firm can maintain without resorting to additional equity issues? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

Question 2: What is the maximum dividend payout ratio? (%)

Plank's Plants had net income of $4,000 on sales of $80,000 last year. The firm paid a dividend of $600. Total assets were $200,000, of which $100,000 was financed by debt.

Question 3: What is the firm's sustainable growth rate? (%)

Question 4: If the firm grows at its sustainable growth rate, how much debt will be issued next year?

Question 5: What would be the maximum possible growth rate if the firm did not issue any debt next year?

Reference no: EM132528596

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What is the maximum possible dividend payout rate the firm

Reference no: EM132528596

Reference no: EM132528596

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