Lemond Cyclery custom manufactures cutting-edge triathlon bikes used by world-class athletes for major

Lemond Cyclery custom manufactures cutting-edge triathlon bikes used by world-class athletes for major competitive events such as the Ironman in Hawaii. The firm builds each bike using its proprietary titanium blend, which is ultra flexible, super light, very strong, and extremely expensive. Its bikes sell for $35,000 each. In 2014, the company has $4.5 million in revenue, and $2.4 million in net income. Lemond Cyclery began the year with $6 million in book equity on January 1. Complete the following, and show all your calculations for each:

a) Forecast the firm’s 2019 sales, assuming a 45% sales growth rate per year starting in 2015.

b) Assuming Lemond Cyclery pays out no dividends in 2014, what is the firm’s maximum sustainable growth rate?

c) Compare Lemond Cyclery’s anticipated sales growth rate and the firm’s maximum sustainable growth rate (which you just calculated in (b). Will the firm be able to support its growth through internally generated funds? If so, discuss the financial reasons why this is so using the textbook’s concept of maximum sustainable growth rate. If you believe the firm will not be able to support its growth, use the data to explain why, and discuss what action management must take.

d) Part 1: If the firm pays out $960,000 in dividends during 2014, what is the firm’s retention rate? Part 2: Assuming the firm pays out $960,000 in 2014 dividends, what is Lemond Cyclery’s sustainable growth rate?

e) After paying $960,000 in 2014 dividends on December 31, what will be Lemond Cyclery’s new book equity balance?

f) Use your final answer for (e) to answer the following: if Lemond Cyclery’s balance sheet shows assets with a book value of $9.6 million, how much debt does the firm have?

need by 9pm PST 9/29/2013