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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 %
Use the information below to estimate the expected return on the stock of Bieber Corporation.
Which of the following should be considered when a company estimates the cash flows used to analyze a proposed project? Cannibalization is a type of externality that is not against the law, and any harm it causes is done to the firm itself. If a proj..
you have just landed a lucrative job as Financial Planner with First Citizens Investment Services (FCIS), major financial services company in your home country.
Weir Inc. has a target capital structure of 30% debt, 20% preferred, and 50% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 8.8%, and the tax rate is 40%. The WACC for Weir..
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Asset utilization ratios
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The annual additions to a participants account in a defined contribution plan are composed of which of the following?
Assume further that a 12%, 10-year bond was issued on 7/1/2014, pays interest semiannually (January 1 and July 1), and sells for $1,100. Use your spreadsheet to find the bond’s yield.
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