Plank’s Plants had net income of $16,000 on sales of $60,000 last year.
Question # 00276502
Posted By:
Updated on: 05/07/2016 12:04 PM Due on: 06/06/2016
Plank’s Plants had net income of $16,000 on sales of $60,000 last year. The firm paid a dividend of $1,600. Total assets were $900,000, of which $450,000 was financed by debt. |
| a. | What is the firm’s sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) |
| Sustainable growth rate | % |
| b. | If the firm grows at its sustainable growth rate, how much debt will be issued next year? (Do not round intermediate calculations.) |
| New debt | $ |
| c. | What would be the maximum possible growth rate if the firm did not issue any debt next year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) |
| Maximum growth rate | % |
-
Rating:
/5
Solution: Plank’s Plants had net income of $16,000 on sales of $60,000 last year.