Question $20(3$ points$)$

Which of the following statements are false?

The maximum sustainable internal growth rate is how much a firm can grow without increasing financial leverage.

In preparing pro forma financial statements we typically assume common stock is a percentage of sales.

If a firm's asset turnover decreases, so will its sustainable growth rate.

When constructing pro forma statement, expenses and assets generally increases with sales.

Statement one $(1)$ is false.

Statement two $(2)$ is false.

Statement three $(3)$ is false.

Statement four $(4)$ is false.

Question $21(3$ points$)$

Which of the following statements are false?

The dividend growth model assumes that dividends grow at a constant rate forever.

Preferred stock can be valued as a perpetuity.

The dividend growth rate is inversely related to a stock's market price.

Preferred stocks have constant growth dividends.

Statement one $(1)$ is false.

Statement two $(2)$ is false.

Statement three $(3)$ is false.

Statement four $(4)$ is false.