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Problem 29-26 Forecast growth rate Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 13% in 2018 and all assets and liabilities increase correspondingly. Income Statement 2017 Sales $ 4,600 Costs, including interest 3,800 Net income $ 800 Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 $ 3,749 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,749 $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate b. If the payout ratio is set at 65% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible E growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal E places.) Sustainable growth rate

Problem 29-26 Forecast growth rate Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 13% in 2018 and all assets and liabilities increase correspondingly. Income Statement 2017 Sales $ 4,600 Costs, including interest 3,800 Net income $ 800 Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 $ 3,749 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,749 $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate b. If the payout ratio is set at 65% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible E growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal E places.) Sustainable growth rate

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter9: Corporate Valuation And Financial Planning
Section: Chapter Questions
Problem 4P: Sales Increase Maggies Muffins Bakery generated 5 million in sales during 2018, and its year-end...
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Problem 29-26 Forecast growth rate Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 13% in 2018 and all assets and liabilities increase correspondingly. Income Statement 2017 Sales $ 4,600 Costs, including interest 3,800 Net income $ 800 Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 $ 3,749 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate
Transcribed Image Text:Problem 29-26 Forecast growth rate Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 13% in 2018 and all assets and liabilities increase correspondingly. Income Statement 2017 Sales $ 4,600 Costs, including interest 3,800 Net income $ 800 Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 $ 3,749 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate
Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,749 $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate b. If the payout ratio is set at 65% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible E growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal E places.) Sustainable growth rate
Transcribed Image Text:Balance Sheet, Year-End 2018 2017 2018 2017 $ 3,749 $ 1,333 1,967 $ 3,300 $ 1,449 2,300 Net assets Debt Equity Total $ 3,749 $ 3,300 Total $ 3,749 $ 3,300 a. If the payout ratio is set at 65% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal growth rate b. If the payout ratio is set at 65% and the firm maintains a fixed debt ratio but issues no equity, what is the maximum possible E growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal E places.) Sustainable growth rate
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