"O Your company would like to determine the growth rate in sales that will allow it to expand as much as possible without having to issue external capital (that is, its AFN will be equal to 0). Assume that you have gathered the data listed below for the firm. Given this information, and using the AFN formula, determine the maximum growth rate of sales that the firm can sustain without having to issue external capital. Capital Intensity Ratio = 1.25 ■ Profit Margin = 7% ■ Dividend Payout Ratio = 20% Current Sales = $200,000 Spontaneous Liabilities = $40,000 ○ 4.79% O 5.63% O 3.96% O 7.36% ○ 6.49%
"O Your company would like to determine the growth rate in sales that will allow it to expand as much as possible without having to issue external capital (that is, its AFN will be equal to 0). Assume that you have gathered the data listed below for the firm. Given this information, and using the AFN formula, determine the maximum growth rate of sales that the firm can sustain without having to issue external capital. Capital Intensity Ratio = 1.25 ■ Profit Margin = 7% ■ Dividend Payout Ratio = 20% Current Sales = $200,000 Spontaneous Liabilities = $40,000 ○ 4.79% O 5.63% O 3.96% O 7.36% ○ 6.49%
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:"O
Your company would like to determine the growth rate in sales that will allow it to
expand as much as possible without having to issue external capital (that is, its
AFN will be equal to 0). Assume that you have gathered the data listed below for
the firm. Given this information, and using the AFN formula, determine the
maximum growth rate of sales that the firm can sustain without having to issue
external capital.
Capital Intensity Ratio = 1.25
■ Profit Margin = 7%
■ Dividend Payout Ratio = 20%
Current Sales = $200,000
Spontaneous Liabilities = $40,000
○ 4.79%
O 5.63%
O 3.96%
O 7.36%
○ 6.49%
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