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Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2019 Sales Cost Net income Assets Total $ 3,500 2,700 $ 800 BALANCE SHEET, YEAR-END 2019 2018 $ 4,500 $ 5,000 $ 4,500 $ 5,000 Debt Equity Total 2019 2018 $ 833 3,667 $ 1,000 4,000 $ 4,500 $ 5,000 Assume the payout ratio is 50%. a. Calculate the internal growth rate where no external debt or equity is to be issued. Note: Do not round intermediate calculations. Enter your answer as a whole percent. b. Calculate the sustainable growth rate where the firm maintains a fixed debt ratio but issues no equity.

Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2019 Sales Cost Net income Assets Total $ 3,500 2,700 $ 800 BALANCE SHEET, YEAR-END 2019 2018 $ 4,500 $ 5,000 $ 4,500 $ 5,000 Debt Equity Total 2019 2018 $ 833 3,667 $ 1,000 4,000 $ 4,500 $ 5,000 Assume the payout ratio is 50%. a. Calculate the internal growth rate where no external debt or equity is to be issued. Note: Do not round intermediate calculations. Enter your answer as a whole percent. b. Calculate the sustainable growth rate where the firm maintains a fixed debt ratio but issues no equity.

Essentials Of Investments
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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Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2019 Sales Cost Net income Assets Total $ 3,500 2,700 $ 800 BALANCE SHEET, YEAR-END 2018 2019 $ 4,500 $ 5,000 Debt Equity Total $ 4,500 $ 5,000 a. Internal growth rate b. Sustainable growth rate X Answer is complete but not entirely correct. Assume the payout ratio is 50%. a. Calculate the internal growth rate where no external debt or equity is to be issued. Note: Do not round intermediate calculations. Enter your answer as a whole percent. b. Calculate the sustainable growth rate where the firm maintains a fixed debt ratio but issues no equity. Note: Do not round intermediate calculations. Enter your answer as a whole percent. 8 × % % 2018 $ 833 3,667 $ 4,500 10 2019 $ 1,000 4,000 $ 5,000
Transcribed Image Text:Here are the abbreviated financial statements for Planner's Peanuts: INCOME STATEMENT, 2019 Sales Cost Net income Assets Total $ 3,500 2,700 $ 800 BALANCE SHEET, YEAR-END 2018 2019 $ 4,500 $ 5,000 Debt Equity Total $ 4,500 $ 5,000 a. Internal growth rate b. Sustainable growth rate X Answer is complete but not entirely correct. Assume the payout ratio is 50%. a. Calculate the internal growth rate where no external debt or equity is to be issued. Note: Do not round intermediate calculations. Enter your answer as a whole percent. b. Calculate the sustainable growth rate where the firm maintains a fixed debt ratio but issues no equity. Note: Do not round intermediate calculations. Enter your answer as a whole percent. 8 × % % 2018 $ 833 3,667 $ 4,500 10 2019 $ 1,000 4,000 $ 5,000
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