A. What is the firm's sustainable growth rate? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place. B. If the firm grows at its sustainable growth rate, how much debt will be issued next year? Note: Do not round intermediate calculations. C/ What would be the maximum possible- growth rate if the firm did not issue any debt next year?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Please show proper step with formula only not excel
Plank's Plants had net income of $5,000
on sales of $50,000 last year. The firm
paid a dividend of $1,100. Total assets
were $300,000, of which $150,000 was
financed by debt.
A. What is the firm's sustainable growth
rate?
Note: Do not round intermediate
calculations. Enter your answer as a
percent rounded to 1 decimal place.
B. If the firm grows at its sustainable
growth rate, how much debt will be issued
next year?
Note: Do not round intermediate
calculations.
C/ What would be the maximum possible
growth rate if the firm did not issue any
debt next year?
Note: Do not round intermediate
calculations. Enter your answer as a
percent rounded to 1 decimal place.
Transcribed Image Text:Plank's Plants had net income of $5,000 on sales of $50,000 last year. The firm paid a dividend of $1,100. Total assets were $300,000, of which $150,000 was financed by debt. A. What is the firm's sustainable growth rate? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place. B. If the firm grows at its sustainable growth rate, how much debt will be issued next year? Note: Do not round intermediate calculations. C/ What would be the maximum possible growth rate if the firm did not issue any debt next year? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.
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