Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales. INCOME STATEMENT, 2019 $ 800 Sales Costs 150 Interest 30 Taxes 100 Net income $ 520 BALANCE SHEET, YEAR-END 2018 2019 $ 1,050 2,100 $ 3,150 2019 2018 Assets $ 2,850 $ 3,150 Debt $ 950 Equity 1,900 $ 2,850 Total $ 2,850 $ 3,150 Total a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at 2/3? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate b. What is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales. INCOME STATEMENT, 2019 $ 800 Sales Costs 150 Interest 30 Taxes 100 Net income $ 520 BALANCE SHEET, YEAR-END 2018 2019 $ 1,050 2,100 $ 3,150 2019 2018 Assets $ 2,850 $ 3,150 Debt $ 950 Equity 1,900 $ 2,850 Total $ 2,850 $ 3,150 Total a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at 2/3? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate b. What is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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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Transcribed Image Text:Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales.
INCOME STATEMENT,
2019
Sales
$ 800
Costs
150
Interest
30
Тахes
100
Net income
$ 520
BALANCE SHEET,
YEAR-END
2018
2019
2018
2019
$ 2,850
$ 1,050
2,100
$ 3,150
Assets
$3,150
Debt
$
950
1,900
$ 2,850
Equity
Total
$ 2,850
$ 3,150
Total
a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at
2/3? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Internal growth rate
%
b. What is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2
decimal places.)
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