Which one of the following statements about the sustainable growth rate (SGR) is NOT true?
A) The SGR is a function of the plowback ratio and the ROE.
B) The SGR determines the rate of growth that the firm can sustain without selling additional shares of equity.
C) The SGR helps management determine whether they can avoid issuing new debt.
D) All of the above are true of the SGR.
Answer: C
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