Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 12% in 2022 and all assets and liabilities increase correspondingly. Income Statement Sales $ 4,400 Costs, including interest. 3,700 Net income $ 700 Net assets Total Balance Sheet, Year-End 2020 2021 $ 3,564 $3,100 Debt $ 3,564 $3,100 Equity Total 2021 $ 1,364 2,200 2020 $ 1,233 1,867 $ 3,564 $ 3,100 a. If the payout ratio is set at 60% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? b. If the payout ratio is set at 60% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible growth rate for Archimedes? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Maximum possible growth rate b. Maximum possible growth rate % %
Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 12% in 2022 and all assets and liabilities increase correspondingly. Income Statement Sales $ 4,400 Costs, including interest. 3,700 Net income $ 700 Net assets Total Balance Sheet, Year-End 2020 2021 $ 3,564 $3,100 Debt $ 3,564 $3,100 Equity Total 2021 $ 1,364 2,200 2020 $ 1,233 1,867 $ 3,564 $ 3,100 a. If the payout ratio is set at 60% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? b. If the payout ratio is set at 60% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible growth rate for Archimedes? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Maximum possible growth rate b. Maximum possible growth rate % %
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
Section: Chapter Questions
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Transcribed Image Text:Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 12% in
2022 and all assets and liabilities increase correspondingly.
Income Statement
Sales
$ 4,400
Costs, including interest.
3,700
Net income
$ 700
Net assets
Total
Balance Sheet, Year-End
2020
2021
$ 3,564 $3,100 Debt
$ 3,564 $3,100
Equity
Total
2021
$ 1,364
2,200
2020
$ 1,233
1,867
$ 3,564
$ 3,100
a. If the payout ratio is set at 60% and no external debt or equity is to be issued, what is the maximum possible growth rate for
Archimedes?
b. If the payout ratio is set at 60% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible
growth rate for Archimedes?
Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
a. Maximum possible growth rate
b. Maximum possible growth rate
%
%
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