1. The Shamrock Vegetable Company has the following results. $6,000,000 4,000,000 Net sales Net total assets Depreciation Net income Long-term debt Equity Dividends 160,000 400,000 2,000,000 1,160,000 160,000 a. Compute Shamrock's ROE directly. Confirm this using the three components. b. Using the ROE computed in Part a, what is the expected sustainable growth rate for Shamrock? c. Assuming the firm's net profit margin went to 0.04, what would happen to Shamrock's ROE? d. Using the ROE in Part c, what is the expected sustainable growth rate? What if divi- dends were only $40,000?

1. The Shamrock Vegetable Company has the following results. $6,000,000 4,000,000 Net sales Net total assets Depreciation Net income Long-term debt Equity Dividends 160,000 400,000 2,000,000 1,160,000 160,000 a. Compute Shamrock's ROE directly. Confirm this using the three components. b. Using the ROE computed in Part a, what is the expected sustainable growth rate for Shamrock? c. Assuming the firm's net profit margin went to 0.04, what would happen to Shamrock's ROE? d. Using the ROE in Part c, what is the expected sustainable growth rate? What if divi- dends were only $40,000?

Name: 1. The Shamrock Vegetable Company has the following results.$6,000,00
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Description: 1. The Shamrock Vegetable Company has the following results.$6,000,0004,000,000Net salesNet total assetsDepreciationNet incomeLong-term debtEquityDividendsa. Compute Shamrock's ROE directly. Confirm this using the three components.b. Using the ROE c

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 4P

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