Question

18-4)
Plank’s Plants had net income of $16,000 on sales of $60,000 last year. The firm paid a

dividend of $1,600. Total assets were $900,000, of which $450,000 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 %  

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