You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity $ 260,000 $ 17,300 $ 6,100 = $ 56,000 $ 87,000 a. Sustainable growth rate b. Additional borrowing c. Growth rate = a. What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What growth rate could be supported with no outside financing at all? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 12.87 % %
You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity $ 260,000 $ 17,300 $ 6,100 = $ 56,000 $ 87,000 a. Sustainable growth rate b. Additional borrowing c. Growth rate = a. What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What growth rate could be supported with no outside financing at all? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 12.87 % %
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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The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:You've collected the following information about Caccamisse, Incorporated:
Sales
Net income
Dividends
Total debt
Total equity
$ 260,000
$ 17,300
$ 6,100
$ 56,000
$ 87,000
a. What is the sustainable growth rate for the company?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity
ratio?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
c. What growth rate could be supported with no outside financing at all?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
a. Sustainable growth rate
b. Additional borrowing
c. Growth rate
12.87 %
%
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