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With a tax rate of 20%, a consumption rate of 50%, a rate-of-return on assets of 14%, and an interest cost of 7%,

a. What leverage ratio must a farmer achieve in order to grow at a 12% rate?

b. What factors should both this farmer and the lender consider when they are deciding on whether the farmer's leverage should be increase to this point?

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Financial Management, Finance

Category:- Financial Management
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