Q. 5You’ve collected the following information about Gandalf, Inc.:Sales = $255,000Net Income = $17,200Dividends = $6,000Total debt = $55,000Total equity = $86,00 What is the sustainable growth rate for the company? (DO NOT round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16)Assuming it grows as this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (DO NOT round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16)What growth rate could be supported with no outside financing at all? (DO NOT round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16)

1) Rentetion ratio(b)=1-DividendNet income =1-600017200=65.12%Return On equity…

Answered: Q. 5 You’ve collected the following…

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Q. 5

You’ve collected the following information about Gandalf, Inc.:

Sales = $255,000

Net Income = $17,200

Dividends = $6,000

Total debt = $55,000

Total equity = $86,00

What is the sustainable growth rate for the company? (DO NOT round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16)
Assuming it grows as this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (DO NOT round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16)
What growth rate could be supported with no outside financing at all? (DO NOT round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16)

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