What is the firm sustainable growth rate

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Reference no: EM131535687

Plank’s Plants had net income of $2,000 on sales of $100,000 last year. The firm paid a dividend of $320. Total assets were $100,000, of which $30,000 was financed by debt.

a. What is the firm’s sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

Sustainable growth rate %

b. If the firm grows at its sustainable growth rate, how much debt will be issued next year? (Do not round intermediate calculations.)

New debt $

c. What would be the maximum possible growth rate if the firm did not issue any debt next year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Maximum growth rate %

Reference no: EM131535687

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