64) If a firm with an asset base of $3,000,000 recently added $150,000 to retained earnings after
a dividend payment of $100,000, then its internal growth rate is: A) 1.67%. B) 3.33%. C) 5.00%. D) 8.33%. 65) What is the maximum internal growth rate for a firm reporting net income of $500,000, a
dividend payout ratio of 40%, and total assets of $10 million? A) 2% B) 3% C) 5% D) 6% 66) A firm plans to grow at 6% a year without increasing financial leverage. It expects to earn a
10% return on equity. What proportion of earnings should it plan to pay out? A) 0.40 B) 0.60 C) 0.67 D) 0.00 67) A firm has an ROE of 15% and a debt-equity ratio of 40%. If it wishes to grow by 9% a year
without external financing, what is the maximum proportion of earnings that it can pay out? A) 1% B) 10% C) 12% D) 16% 68) Which one of the following will reduce the internal growth rate, other things equal?
A) A higher plowback ratio B) A higher debt-to-asset ratio C) A higher return on equity D) A higher return on assets 69) What is the sustainable growth rate for a firm with net income of $2.5 million, cash dividends
of $1.5 million, and return on equity of 18%? A) 3.0% B) 5.4% C) 7.2% D) 10.8%
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