Plank%u2019s Plants had net income of $4,000 on sales of $70,000 last year. The
ID: 2374780 • Letter: P
Question
Plank%u2019s Plants had net income of $4,000 on sales of $70,000 last year. The firm paid a dividend of $1,480. Total assets were $200,000, of which $80,000 was financed by debt.
What is the firm%u2019s sustainable growth rate? (Do not round intermediate calculations. Round your answer to 1 decimal place.)
If the firm grows at its sustainable growth rate, how much debt will be issued next year? (Do not round intermediate calculations.)
What would be the maximum possible growth rate if the firm did not issue any debt next year? (Do not round intermediate calculations. Round your answer to 1 decimal place.)
a.What is the firm%u2019s sustainable growth rate? (Do not round intermediate calculations. Round your answer to 1 decimal place.)
Explanation / Answer
Planks Plants had net income of $4,000 on sales of $70,000 last year. The firm paid a dividend of $1,480. Total assets were $200,000, of which $80,000 was financed by debt.
a.
What is the firms sustainable growth rate? (Do not round intermediate calculations. Round your answer 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. Round your answer to 1 decimal place.)
Maximum growth rate
%
a.
What is the firms sustainable growth rate? (Do not round intermediate calculations. Round your answer to 1 decimal place.)