What is the firm sustainable growth rate

Reference no: EM132038752

Question: Plank's Plants had net income of $6,000 on sales of $70,000 last year. The firm paid a dividend of $960. Total assets were $300,000, of which $120,000 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: EM132038752

Questions Cloud

Calculate the price of two year european put option : Calculate the price of a two year European put option on Excel Network Systems stock with a strike price of £60.

What is the reputation risk : What is the reputation risk? Is the reputation risk which is the greatest risk facing business today?

What is the profit maximizing quantity and price : What is the profit maximizing quantity and price that Econocorp should charge its customers? What is the profit maximizing condition?

Claim ownership of the property on her side of the fence : Can Amara claim ownership of the property on her side of the fence?

What is the firm sustainable growth rate : Plank's Plants had net income of $6,000 on sales of $70,000 last year. The firm paid a dividend of $960. Total assets were $300,000, of which $120,000.

What is the firm weighted average cost of capital : The yield-to-maturity on the debt is 8.49 percent. What is the firm's weighted average cost of capital if the tax rate is 34 percent?

Determine the temperature at mid plane : A plane wall made of material of density 7800 kg/m3, thermal conductivity 45 W/mK, Determine the temperature at mid plane

What type of ownership should ava give : Ava, owns several houses and is concerned about her older brother's poor financial situation. The brother has one son, but Ava does not like him

How many shares will remain after the repurchase : Their Po is $30 with Noof 3.2 million. How many shares will remain after the repurchase?

User Account

All Pages