Find what is the particular growth rate for the next year

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Reference no: EM132634836

Intro- Your company's most recent income statement and balance are given below:

Income statement ($ million)        Balance sheet ($ million)

Sales 23                           Current assets 12.6          Debt 18.9

Costs 18.4                        Fixed assets 50.4         Equity 44.1

Net income 4.6                 Total assets 63             Total 63

Sales, assets and costs are expected to grow by the same rate next year, while debt will stay constant. The company pays out 20% of net income as dividends.

Problem 1: What is the particular growth rate for the next year, at which company will need zero eternal financing (EFN = 0)? What is the internal growth rate?

Reference no: EM132634836

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