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Debt-Equity Ratio of Dal. Corp

Dal. Corp has an 8% profit margin and a .9 ratio of capital intensity. The firm maintains a 40% dividend payout ratio and a 10% rate of growth. The company wishes to keep its debt-equity ratio constant. What must the debt-equity ratio be?

Solution Summary

Some lines of calculation to work out what must be the debt-equity of Dal. Corp if it maintains growth and payout ratio.

$2.19