You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity = $ 330,000 $ 18,700 $ 7,500 $ 70,000 = $ 101,000 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. % %

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
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You've collected the following information about Caccamisse, Incorporated:
Sales
Net income
Dividends
Total debt
Total equity
=
a. Sustainable growth rate
b. Additional borrowing
c. Growth rate
=
=
=
=
$ 330,000
$ 18,700
$ 7,500
$ 70,000
$ 101,000
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.
%
%
Transcribed Image Text:You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity = a. Sustainable growth rate b. Additional borrowing c. Growth rate = = = = $ 330,000 $ 18,700 $ 7,500 $ 70,000 $ 101,000 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. % %
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