Income Statement Sales Costs Taxable income Taxes (21%) Net income $ 20,300 13,900 Sustainable growth rate $6,400 1,344 $5,056 Current assets Fixed assets Total Balance Sheet $11,980 32,400 % 44,380 Debt Equity $ 16,540 27,840 Assets and costs are proportional to sales. Debt and equity are not. The compan maintains a constant 45 percent dividend payout ratio. What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percen- rounded to 2 decimal places, e.g., 32.16.) Total $44,380

Income Statement Sales Costs Taxable income Taxes (21%) Net income $ 20,300 13,900 Sustainable growth rate $6,400 1,344 $5,056 Current assets Fixed assets Total Balance Sheet $11,980 32,400 % 44,380 Debt Equity $ 16,540 27,840 Assets and costs are proportional to sales. Debt and equity are not. The compan maintains a constant 45 percent dividend payout ratio. What is the sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percen- rounded to 2 decimal places, e.g., 32.16.) Total $44,380

Name: Income StatementSalesCostsTaxable incomeTaxes (21%)Net income$20,3001
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Description: Income StatementSalesCostsTaxable incomeTaxes (21%)Net income$20,30013,900Sustainable growth rate$6,4001,344$5,056Current assetsFixed assetsTotalBalance Sheet$11,980 Debt32,400 Equity%$44,380Total$ 16,54027,840Assets and costs are proportional to sa

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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A company has the following information: Earnings before interest and taxes Interest expense $140.00 12.00 40% 10.00 12.00 Tax rate Net change in debt Investment in total capital What is its free cash flow to equity? Do not round intermediate calculations. Round your answer to the nearest cent.
A firm had a debt ratio of 0.85. The pretax cost of debt is 8% and the reqiured return on asset is 15.5%. What is the cost of equity if we factorin the firms tax rate of 24%? A) 19.53 B) 18.92 C) 21.57 D) 20.35 E) 20.96
Zeebadee Inc. wants to forecast free cash flow to equity (FCFE) using the percent-of- sales method. Prior year sales were $10,000. What is FCFE in Year 5 based on the information presented below? Sales growth Profit margin Net FCInv (% of Sales) WCInv (% of Sales) DR $2,335.93 $1,687.06 $1,008.00 $1,557.29 Year 1 Year 4 Year 2 Year 3 14.00% 12.00% 10.00% 10.00% 9.00% 10.00% 12.00% 12.00% 8.00% 8.00% 8.00% 6.00% 3.00% 3.00% 2.00% 3.00% 40.00% 40.00% 40.00% 40.00% Year 5 5.00% 12.00% 3.00% 1.00% 40.00% 4
Use the table for the question(s) below. FCF Forecast ($ million) Year Sales 1 270 12.5% 32.40 Less: Income Tax (37%) (6.48) Less Increase in NWC (12% of Change in Sales) 3,60 Free Cash Flow 22.32 Growth versus Prior Year EBIT (10% of Sales) 0 240 OA. $4.27 OB. $7.47 OC. $12.8 OD. $5.12 2 290 7.4% 34.80 (6.96) 2.40 25.44 ACCE 3 310 6.9% 37.20 (7.44) 2.40 27.36 Banco Industries expect sales to grow at a rapid rate over the next 3 years, but settle to an industry growth rate of 4% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. Banco industries has a weighted average cost of capital of 10%, $30 million in cash, $60 million in debt, and 18 million shares outstanding. If Banco Industries can reduce its operating expenses so that EBIT becomes 12% of sales, by how much will its stock price increase? 4 325.5 5.0% 39.06 (7.81) 1.86 29.388
Premier Corporation has an ROE of 12 percent and a payout ratio of 20 percent. What is its sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Sustainable growth rate %
1. Given the most recent financial statements for FY2023. Sales for FY2024 are expected to grow by 10 percent. The following assumption must be held in the pro forma financial statements. The tax rate (percentage), the interest expense ($ amount), and the dividend payout ratio (percentage) will remain constant. COGS, SGA, Depreciation, all current asset accounts, Net PPE, intangibles, other assets, and accounts payable increase spontaneously with sales. Calculate the pro forma value for total assets for FY24 if the firm operates at full capacity and no new debt or equity is issued. (Enter percentages as decimals and round to 4 decimals) 2. Given the most recent financial statements for FY2023. Sales for FY2024 are expected to grow by 10 percent. The following assumption must be held in the pro forma financial statements. The tax rate (percentage), the interest expense ($ amount), and the dividend payout ratio (percentage) will remain constant. COGS, SGA, Depreciation, all…
Based on the following information you have collected, what is the sustainable growth rate (SGR) for Leo's Photography Studio? Profit Margin Debt/Equity Ratio Capital Intensity Ratio Net Income Dividends O A. O B. O C. O D. 12.42% 8.52% 15.15% 13.63% 7.1% 0.60 0.75 $48,000 $10,000
A firm wants a sustainable growth rate of 2.73 percent while maintaining a dividend payout ratio of 39 percent and a profit margin of 6 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth?
Tinsley, Incorporated, wishes to maintain a growth rate of 16.25 percent per year and a debt-equity ratio of .95. The profit margin is 4.7 percent, and total asset turnover is constant at 1.07. a. What is the dividend payout ratio? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the maximum sustainable growth rate for this company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Dividend payout ratio b. Sustainable growth rate % %
Dog
Which statement is correct?a. The cost of debt is determined by taking the present value of the interest payments and principal times one minus the tax rate.b. The difference in computing the cost of capital between using the accumulated profits and issuance of new ordinary shares is the growth rate.c. Increase in flotation costs, increase in the company’s beta and increase in the expected inflation will all lead to d. increase the company’s weighted average cost of capital.e. Increasing the company’s dividend payout would mitigate the company’s need to raise new ordinary shares.f. none of the above

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