Problem 29-26 Forecast growth rate Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 13% in 2018 and all assets and liabilities increase correspondingly. Income Statement 2017 Sales $ 4,600 Costs, including interest 3,800 Net income $ 800 Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 $ 3,749 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,749 $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate b. If the payout ratio is set at 65% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible E growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal E places.) Sustainable growth rate
Problem 29-26 Forecast growth rate Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 13% in 2018 and all assets and liabilities increase correspondingly. Income Statement 2017 Sales $ 4,600 Costs, including interest 3,800 Net income $ 800 Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 $ 3,749 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,749 $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate b. If the payout ratio is set at 65% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible E growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal E places.) Sustainable 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
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Transcribed Image Text:Problem 29-26 Forecast growth rate
Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase
by 13% in 2018 and all assets and liabilities increase correspondingly.
Income Statement
2017
Sales
$ 4,600
Costs, including interest
3,800
Net income
$ 800
Balance Sheet, Year-End
2018
2017
2018
2017
$ 3,749
$ 1,333
1,967
$ 3,300
$ 1,449
2,300
$ 3,749
Net assets
Debt
Equity
Total
$ 3,749
$ 3,300
Total
$ 3,300
a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for
Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Internal growth rate
Transcribed Image Text:Balance Sheet, Year-End
2018
2017
2018
2017
$ 3,749
$ 1,333
1,967
$ 3,300
$ 1,449
2,300
Net assets
Debt
Equity
Total
$ 3,749
$ 3,300
Total
$ 3,749
$ 3,300
a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for
Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Internal growth rate
b. If the payout ratio is set at 65% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible
E growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal
E places.)
Sustainable growth rate
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