Assume the following ratios are constant please provide this question solution accounting Assume the following ratios are constant:Total asset turnover 2.60Profit margin 5.5%Equity multiplier 1.40Payout ratio 20%What is the sustainable growth rate?

2. Calculate Retention Ratio:Retention Ratio = 1 - Payout Ratio= 1 - 20%= 0.80 or 80% 3. Calculate…

Answered: Assume the following ratios are…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section12.6: Additional Funds Needed (afn) Equation Method

Problem 5ST

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The annual growth rate of your investment can be measured by A. THE ANNUAL MEAN OF YOUR ANNUAL RETURN B. THE MAXIMUM RETURN MINUS MINUMUM RETURN C. THE ANNUAL GEOMOETRIC MEAN OF YOUR RETURN D. ALL OF THE ABOVE
You are given the following information for a firm: EBIT x (1-T) this period Depreciation Net Working Capital Increase Asset Beta Capital Expenditures Growth Rate of FCF Risk Free Rate = = $17 million $2.4 million $0 1.1 $3.7 million 9% 3% Market Risk Premium Using the above data, what is the present value of all FCF? Don't forget that in applying the growing perpetuity formula, you have to use not this year's FCF, but next period's FCF (multiply this period's FCF by (1 + growth rate of FCF). 6.3% Your answer should be in $millions. For example, if your answer is $7.34 million, then enter 7.34 in the answer box.
1. Using the Capital Asset Pricing Model (CAPM), what's this company's cost of common equity? ·Expected market return = 10% Risk-free rate = 4% Beta = 1.3
What is the internal rate of return of an investment that requires a 10 percent minimum rate of return and has the following projected cash flows: Yr0 = -100, Yr1 = 25, Yr2 = 35, Yr3 = 45, Yr4 = 35, and Yr5 = 30? a. 19.33 percent b. 21.35 percent c. 20.05 percent d. 22.24 percent
You are given the following information for a firm: EBIT this period = $18.7 million Depreciation = $2.5 million Net Working Capital Increase = $0 Asset Beta = 1.4 Capital Expenditures = $3.2 million Growth Rate of FCF = 3% Risk Free Rate = 3% Market Risk Premium = 6.3% Using the above data, what is the present value of all FCF?
Please explain it correctly. I'll rate it
Which investment criteria answers the question: "How quickly do we recover our investment, in nominal dollars?" A) net present value B) internal rate of return C) profitability index D) payback period
9) The Green Giant has a 5 percent profit margin and a 40 percent dividend payout ratio. The total asset turnover is 1.2 times and the equity multiplier is 1.5 times. What is the sustainable rate of growth?
Use the information from this table to find the expected return for each asset. State of Economy Probability of State Return on Asset J Return on Asset K Boom 30% 5% 24% Growth 40% 5% 12% Stagnant 20% 5% 4% Recession 10% 5% -10%
What is the profitability index for an investment with the following cash flows given a 20 percent required return? Year Cash Flow 0 -$21,000.00 1 $7,200.00 2 $9,300.00 3 $8,500.00
The probability distribution of the returns of two assets, A and B, are shown in the table below. Calculate the covariance between the returns of asset A and asset B. State of Economy Probability of State Return of Asset A Return of Asset B Boom 0.20 40% 5% Normal 0.45 20% 10% Slow Down 0.25 0% 15% Recession 0.10 -20% 30% O-0.3750 -0.0114 0.3750 -50.2500 -2.525

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Assume the following ratios are constant: Total asset turnover 2.60 Profit margin 5.5% Equity multiplier 1.40 Payout ratio 20% What is the sustainable growth rate?