The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume thatEagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2023. The tax rate willremain constant.SalesIncome StatementCosts$ 2,7501,150Pretax incomeTaxes (at 30.0%)$ 1,600480Net income$ 1,1202021Balance Sheet, Year-End2022Net assets$ 4,800 $ 4,500DebtTotal$ 4,800 $ 4,500EquityTotal2022$ 1,9002,9002021$1,8002,700$ 4,800 $4,500a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internalgrowth rate for 2023?b. What is the sustainable growth rate for 2023?Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.a. Internal growth rateb. Sustainable growth rate%%

Internal growth rate refers to the growth increase up to maximum level from the available resources…

The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Income Statement $2,750 1,150 $1,600 480 Sales Costs Pretax income Taxes (at 30.0%) Net income $ 1,120 Balance Sheet, Year-End Net assets 2022 2021 $ 4,800 $4,500 2022 Total $ 4,800 $4,500 Debt Equity Total 2021 $1,900 $ 1,800 2,900 2,700 $ 4,800 $4,500 a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023?

The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Income Statement $2,750 1,150 $1,600 480 Sales Costs Pretax income Taxes (at 30.0%) Net income $ 1,120 Balance Sheet, Year-End Net assets 2022 2021 $ 4,800 $4,500 2022 Total $ 4,800 $4,500 Debt Equity Total 2021 $1,900 $ 1,800 2,900 2,700 $ 4,800 $4,500 a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023?

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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ssume that today is December 31, 2018, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2019 is expected to be $500 million. The depreciation expense for 2019 is expected to be $180 million. The capital expenditures for 2019 are expected to be $400 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 6% per year. The required return on equity is 15%. The WACC is 10%. The firm has $200 million of non-operating assets. The market value of the company's debt is $3.096 billion. 340 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent. $
The most recent financial statements for Crosby, Incorporated, appear below. Interest expense will remain constant, the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Assume the firm is operating at full capacity and the debt-equity ratio is held constant. Sales Costs Other expenses Earnings before interest and taxes Interest expense Taxable income Taxes (21%) Net income CROSBY, INCORPORATED 2021 Income Statement Dividends Addition to retained earnings → Show Transcribed Text Current assets Cash Accounts receivable Inventory Total Total assets Fixed assets Net plant and equipment Assets $ 27,475 56,265 $ 20,940 31,970 71,320 $ 124,230 CROSBY, INCORPORATED Balance Sheet as of December 31, 2021 $ 341,980 $ 686,530 554,420 14,020 $ 466,210 $ 118,090 12,090 $ 106,000 22,260 $ 83,740 Liabilities and Owners' Equity Current liabilities Accounts payable Notes payable…
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You are given the following information for Hendrix Guitars, Incorporated: Profit margin Total asset turnover Total debt ratio Payout ratio 6.3% 1.6 Sustainable growth rate .44 35% Calculate the sustainable growth rate. (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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Problem #1: Proforma Statements Prepare a common size income statement given the following information: Revenues = $100,000 COGS = $43,000 SG&A = $22,000 Interest Owed = $5,000 Tax Rate = 40% Problem #2: Proforma Statements Prepare a pro forma income statement from the data and common size income statement from #1, assuming that the sales will grow by 5% and all expenses but interest and taxes will scale with sales. 1, Use your plan of action to solve each problem, clearly outlining the procedures used, providing a concise explanation of each step, labeling relevant formulas, and showing worked out calculations and complete solutions. You may use an Excel spreadsheet or a calculator to help you perform the necessary calculations, but all corresponding work must be shown completely. 2. Answer all questions posed in the problem; if applicable, analyze and evaluate your results and provide a contextual explanation of the solutions you obtained. 3. Review your…
The most recent financial statements for Crosby, Incorporated, follow. Sales for 2021 are projected to grow by 30 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. CROSBY, INCORPORATED 2020 Income Statement Sales $ 749,000 Costs 584,000 Other expenses 20,000 Earnings before interest and taxes $ 145,000 Interest paid 16,000 Taxable income $ 129,000 Taxes (21%) 27,090 Net income $ 101,910 Dividends $ 31,592 Addition to retained earnings 70,318 CROSBY, INCORPORATED Balance Sheet as of December 31, 2020 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 20,840 Accounts payable $ 55,000 Accounts receivable 43,780 Notes payable 14,200 Inventory 93,960 Total $ 69,200…
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 internal growth rate if the firm operates at full capacity and no new debt or equity is issued. (Enter percentages as decimals and round to 4 decimals) MSFT ($ in millions, shares in millions) Income Statement Sales COGS Gross Profit Research and Dev. SGA FY2023 211,915 65,863 146,052 27,195 16653 Depreciation 13681 Operating Income, EBIT 88,523 Interest Expense 1968 Pretax income, EBT 86,555 Taxes 16950 Net income 69,605 32,902 36,703 Retained Earnings Dividends Price per share Shares outstanding 330.24 7,430 Balance Sheet…
The most recent financial statements for Crosby, Incorporated, appear below. Sales for 2022 are projected to grow by 25 percent. Interest expense will remain constant; the tax rate and the dividend payout rate also will remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. Sales Costs Other expenses CROSBY, INCORPORATED 2021 Income Statement Earnings before interest and taxes Interest expense Taxable income Taxes (24%) Net income Dividends Addition to retained earnings $ 19,940 50,664 $772,000 628,000 33,500 $ 110,500 17,600 $ 92,900 22,296 $ 70,604
Based on the above information, calculate the sustainable growth rate for Kayla's Heavy Equipment.
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