For the last 20 years, a firm’s earnings per quarter have grown at a constant rate of 4%. Over the same 20 year period, quarterly dividends have also grown at 4%. What is true about the firm over this 20-year period?
The firm only invested in positive NPV investments
The payout ratio was constant
The firm issued more shares of stock every quarter
The firm never issued bonds
The firm did not pay dividends before this 20 year period