Plank’s Plants had net income of $2,000 on sales of $50,000 last year. The firm paid a dividend of $500. Total assets were $100,000, of which $40,000 was financed by debt. a. What is the firm’s sustainable growth rate
b. If the firm grows at its sustainable growth rate, how much debt will
be issued next year if the debt-equity ratio is constant?
c. What would be the maximum possible growth rate if the firm did not
issue any debt next year?