Afirm has adopted a policy whereby it will not seek any additional external financing. given this, what is the maximum growth rate for the firm if it has net income of $32,600, total equity of $294,000, total assets of $503,00, and a 25 percent dividend payout ratio? a) 5.11 percentb) 4.88 percentc) 6.62 percentd) 7.67 percente) 8.37 percent

The maximum growth rate to my calculations is 8.32%, since it is closer to option E), I´d choose E) 8.37%

Explanation:

Hi, in order to find the growth rate given all the info of the problem, we need to use the following formula.

Where:

g = growth rate

b=retention ratio

R = return on equity

Since R = Earnings / Equity, and our dividend payout ratio (equals to 1 - b)our fromula changes to:

So, everything should look like this:

So, the growth rate is equal to 8.32% but this option is not available, therefore we´ll go for the closest one, that is E) 8.37%.

Best of luck.

the answer is 10c + 6b = 32

step-by-step explanation: