Actual sales growth exceeds its sustainable rate of growth

Assignment Help Financial Management

Reference no: EM132057578

1. Jacobee Corporation has net income of $35 million per year on net sales of $110 million per year. It currently has no long-term debt, but is considering a debt issue of $40 million. The interest rate on the debt would be 10%. Jacobee Corp. currently faces an effective tax rate of 35%. What would be the annual interest tax shield to Jacobee Corp. if it goes through with the debt issuance?

$560,000

$1,400,000

$8,000,000

$20,000,000

2. Which of the following actions would NOT help a firm's growth problem if its actual sales growth exceeds its sustainable rate of growth?

I. Increase dividends

II. Prune away less-profitable products

III. Decrease financial leverage

IV. Repurchase shares

I and IV only

I and III only

I, II, and IV only

I, III, and IV only

I, II, III, and IV

Reference no: EM132057578

Questions Cloud

Calculate roa with changes and without changes : a. Calculate ROA with changes and without changes? (Round your answers to 2 decimal places.)

What is the initial cash outflow that should be used : What is the initial cash outflow that should be used when analyzing this project?

Research examples of poorly written lists : Conduct research about parallel grammatical construction and provide a definition. You may use Internet or book sources to find content.

What are the characteristics of standard normal distribution : How would you calculate the probability between one negative value and one positive value using the standard normal distribution?

Actual sales growth exceeds its sustainable rate of growth : Which of the following actions would NOT help a firm's growth problem if its actual sales growth exceeds its sustainable rate of growth?

Discuss in your learning team the communications issues : Discuss in your learning team the communications and group behavioral issues that might arise in an organization that hires employees for their first job.

Advantages and disadvantages to an organization in assessing : What are the advantages and disadvantages to an organization in assessing its green performance measures?

Explain how the qhsr supports the responsibilities : Explain how the QHSR supports the responsibilities, structures, and components of the DHS.

Informal line of credit with revolving credit agreement : Compare and contrast an informal line of credit with a revolving credit agreement.

User Account

All Pages