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What is the maximum sustainable growth rate

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Reference no: EM132403282

Dahlia Inc. wishes to maintain a growth rate of 11 percent per year and a debt- equity ratio of 0.2. The profit margin is 5.9 percent and the ratio of total assets to sales is constant at 1.56.

a) What dividend payout ratio is necessary to achieve this growth rate under these constraints?

b) What is the maximum sustainable growth rate possible given these constraints?

Reference no: EM132403282

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