For a firm with $3 million in total assets, $400,000 in net income, and $150,000 in dividend
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Question:
For a firm with $3 million in total assets, $400,000 in net income, and $150,000 in dividend payments, first calculate the maximum rate of growth in sales without tapping external sources of funds. Next, show how that growth rate changes if the dividend payout ratio is reduced to 20 percent. Do these two points suggest that shareholders must be willing to trade dividends for growth?
Related Book For
Entrepreneurial Finance
ISBN: 978-0538478151
4th edition
Authors: J . chris leach, Ronald w. melicher
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