Sal's Pizza has a dividend payout ratio of 10 percent. The firm does not want to issue additional equity shares but does want to maintain its current debt-equity ratio and its current dividend policy. The firm is profitable. Which one of the following defines the maximum rate at which this firm can grow?
A. internal growth rate ? (1 - 0.10)
B. sustainable growth rate ? (1 - 0.10)
C. internal growth rate
D. sustainable growth rate
E. zero percent
Answer: D. sustainable growth rate
Business
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