Abbreviated financial statements for archimedes levers

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Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales increase by 14% in 2014 and all other items, including debt, increase correspondingly.

Income Statement
Sales $ 4,800
Costs, including interest 3,900

Net income $ 900

Balance Sheet, Year-end
2013 2012 2013 2012
Assets $ 3,936 $ 3,500 Debt $ 1,536 $ 1,433
Equity 2,400 2,067

Total $ 3,936 $ 3,500 Total $ 3,936 $ 3,500

a. If the payout ratio is set at 50% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

Growth rate %

b. If the payout ratio is set at 50% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Growth rate %

Reference no: EM13488273

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