Consider the figures below: Net Current Assets = $100 Net Fixed Assets = $200 Long Term Debt = $150 Equity = $150 Sales = $1000 Costs = $800 Taxes = $62 Assume that costs and assets increase at the same rate as sales, but debt and equity do not. Also assume that 71.9% of net income is paid out in dividends, and the firm's fixed assets are being used at FULL capacity. The tax rate is constant. If the company does not wish to issue any new equity or debt, what is the maximum growth rate in sales that they can achieve? [Keep at least 3 decimal places for all intermediate steps. Express your final answer with 2 decimal places (ie. 55555.55 and NO COMMAS)] Maximum Growth Rate: %
Consider the figures below: Net Current Assets = $100 Net Fixed Assets = $200 Long Term Debt = $150 Equity = $150 Sales = $1000 Costs = $800 Taxes = $62 Assume that costs and assets increase at the same rate as sales, but debt and equity do not. Also assume that 71.9% of net income is paid out in dividends, and the firm's fixed assets are being used at FULL capacity. The tax rate is constant. If the company does not wish to issue any new equity or debt, what is the maximum growth rate in sales that they can achieve? [Keep at least 3 decimal places for all intermediate steps. Express your final answer with 2 decimal places (ie. 55555.55 and NO COMMAS)] Maximum 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
Problem 1PS
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![Consider the figures below:
Net Current Assets = $100
Net Fixed Assets = $200
Long Term Debt = $150
Equity = $150
Sales = $1000
Costs = $800
Taxes = $62
Assume that costs and assets increase at the same rate as sales, but debt and equity do not. Also assume that 71.9% of
net income is paid out in dividends, and the firm's fixed assets are being used at FULL capacity. The tax rate is constant. If
the company does not wish to issue any new equity or debt, what is the maximum growth rate in sales that they can
achieve?
[Keep at least 3 decimal places for all intermediate steps. Express your final answer with 2 decimal places (ie. 55555.55
and NO COMMAS)]
Maximum Growth Rate:
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd5eb6217-833c-4d24-896f-a291778fccc6%2F5643a015-5d1c-4161-937d-8fb985f9136a%2Fl0ozty_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider the figures below:
Net Current Assets = $100
Net Fixed Assets = $200
Long Term Debt = $150
Equity = $150
Sales = $1000
Costs = $800
Taxes = $62
Assume that costs and assets increase at the same rate as sales, but debt and equity do not. Also assume that 71.9% of
net income is paid out in dividends, and the firm's fixed assets are being used at FULL capacity. The tax rate is constant. If
the company does not wish to issue any new equity or debt, what is the maximum growth rate in sales that they can
achieve?
[Keep at least 3 decimal places for all intermediate steps. Express your final answer with 2 decimal places (ie. 55555.55
and NO COMMAS)]
Maximum Growth Rate:
%
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