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A company has a retention ratio of 40 percent and a sustainable growth rate of 9 percent. The capital intensity ratio is 1.20, and the debt-equity ratio is 0.50. What is the profit margin? a) 7.75 percent b) 8.25 percent c) 6.50 percent d) 5.75 percent

A company has a retention ratio of 40 percent and a sustainable growth rate of 9 percent. The capital intensity ratio is 1.20, and the debt-equity ratio is 0.50. What is the profit margin? a) 7.75 percent b) 8.25 percent c) 6.50 percent d) 5.75 percent

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 6P
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A company has a retention ratio of 40 percent and a sustainable growth rate of 9 percent. The capital intensity ratio is 1.20, and the debt-equity ratio is 0.50. What is the profit margin? a) 7.75 percent b) 8.25 percent c) 6.50 percent d) 5.75 percent
Transcribed Image Text:A company has a retention ratio of 40 percent and a sustainable growth rate of 9 percent. The capital intensity ratio is 1.20, and the debt-equity ratio is 0.50. What is the profit margin? a) 7.75 percent b) 8.25 percent c) 6.50 percent d) 5.75 percent
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