What is the firms sustainable growth rate

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Reference no: EM131502713

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: EM131502713

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