Your firm has an ROE of 11.2%, a payout ratio of 24%, $586, 300 of stockholders' equity, and $356,000 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue? The sustainable growth rate is %. (Round to three decimal place.) The ending total assets at the sustainable growth rate will be $ (Round to the nearest dollar.) Because the firm grew at its sustainable growth rate, its debt/equity ratio remains constant at 0.607198 and the debt-to-assets ratio will be 0.377799. Thus, the new debt in the capital structure will be 0.377799 times $1,022, 509 = $386, 303. Since the firm started at $356,000, it will issue about $30,303 in additional debt. Is the above statement true or false?
Your firm has an ROE of 11.2%, a payout ratio of 24%, $586, 300 of stockholders' equity, and $356,000 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue? The sustainable growth rate is %. (Round to three decimal place.) The ending total assets at the sustainable growth rate will be $ (Round to the nearest dollar.) Because the firm grew at its sustainable growth rate, its debt/equity ratio remains constant at 0.607198 and the debt-to-assets ratio will be 0.377799. Thus, the new debt in the capital structure will be 0.377799 times $1,022, 509 = $386, 303. Since the firm started at $356,000, it will issue about $30,303 in additional debt. Is the above statement true or false?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Your firm has an ROE of 11.2%, a payout ratio of 24%, $586, 300 of
stockholders' equity, and $356,000 of debt. If you grow at your
sustainable growth rate this year, how much additional debt will you
need to issue?
The sustainable growth rate is %. (Round to three decimal place.)
The ending total assets at the sustainable growth rate will be $
(Round to the nearest dollar.)
Because the firm grew at its sustainable growth rate, its debt/equity
ratio remains constant at 0.607198 and the debt-to-assets ratio will be
0.377799. Thus, the new debt in the capital structure will be 0.377799
times $1,022, 509 = $386, 303. Since the firm started at $356,000, it will
issue about $30,303 in additional debt. Is the above statement true or
false?
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