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According to the sustainable growth model, if a firm finances its assets with 75% debt and 25% equity, and retains $3 million in earnings in a given year, the firm can afford to borrow an additional ______ to maintain the desired mix of debt and equity.

a. $9 million

b. $5.25 million

c. $2.25 million

d. $1 million

e. $500,000

f. $450,000

g. none of the above

 

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