Problem 4-13 Sustainable Growth [LO3]Premier Corporation has an ROE of 14 percent and a payout ratio of 22 percent. What isits sustainable growth rate? (Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g., 32.16.)Sustainable growth rate%

The sustainable growth rate is a financial indicator that shows the maximum pace at which a firm may…

Answered: Problem 4-13 Sustainable Growth [LO3]…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter14: Valuation: Market-based Approach

Section: Chapter Questions

Problem 18PC

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Problem 4-12 Internal Growth [LO3] Fairlane Company. has an ROA of 12 percent and a payout ratio of 25 percent. What is its internal growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal Growth Rate.
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P4-19 Growth and Assets [LO3] A firm wishes to maintain an sustainable growth rate of 11 percent and a dividend payout ratio of 64 percent. The ratio of total assets to sales is constant at 1.1, and the profit margin is 9.1 percent. If the firm also wishes to maintain a constant debt-equity ratio, what must it be? Multiple Choice 6.87 5.87 4.87 2.33 3.87
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Problem 19.17 If projected sales growth is actually 8.80%, Calculate the EFN. (Refer to Exhibits 19.10 and 19.11.) (Round answer to 2 decimal places, e.g. 0.45. Enter negative amount using either a negative sign preceding the number e.g. -0.45 or parentheses e.g. (0.45).) Exhibit 19.10 Empire Enterprises: Pro Forma Income Statement and Balance Sheet ($ millions) Income Statement Net sales $ 120.0 Costs 108.0 Net income $ 12.0 Dividends 24 $ 7.2 Additions to retained earnings $ 4.8 Balance Sheet Assets Liabilities and Stockholders' Equity Change Change Assets $ 60.0 S 10.0 Total debt $ 20.0 $0.0 4.8 Equity Total liabilities and stockholder's equity 34.8 Total assets $ 60.0 $ 10.0 $ 54.8 $ 5.2 $ 4.8 External financing needed (EFN) $ 5.2 The pro forma balance sheet for Empire Enterprises does not balance, and the difference is the amount of EFN. Because the company's board does not wish to issue common stock, the funding will have to take the form of long-term debt.
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k #8 (Chapter 9b), Round 2 Problem 9-15 Calculating Profitability Index [LO7] Year 0 1 2 3 Cash Flow -$17,500 9,800 8,700 5,200 Saved a. What is the profitability index for the set of cash flows if the relevant discount rate is 10 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. What is the profitability index for the set of cash flows if the relevant discount rate is 15 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) c. What is the profitability index for the set of cash flows if the relevant discount rate is 22 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) a. Profitability index b. Profitability index c. Profitability index
1 $ 12.36 2 $ 13.60 3 $ 15.82 4 $ 17.80 5 $ 20.90 6 $ 21. 78 How do you find the geometric average of the growth rate
What is the sustainable growth rate if the ROE is 17% and the payout ratio is 25%. a. 12.79% b. 8.00% c. 14.61% d. 8.62%
Problem 8-13 Calculating Profitability Index [LO 6] Consider the following cash flows: Year Cash Flow 0 −$ 29,700 1 14,000 2 14,900 3 11,300 What is the profitability index for the cash flows if the relevant discount rate is 12 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. What is the profitability index if the discount rate is 17 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. What is the profitability index if the discount rate is 24 percent? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.
Sustainable Growth Rate The Raindrop Company has an ROE of 12.1 percent and a payout ratio of 25 percent.a. What is the company’s sustainable growth rate?b. Can the company’s actual growth rate be different from its sustainable growth rate? Why or why not?c. How can the company increase its sustainable growth rate?

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