Plank’s Plants had net income of $4,000 on sales of $60,000 last year
Question
Plank’s Plants had net income of $4,000 on sales of $60,000 last year. The firm paid a dividend of $1,840. Total
assets were $200,000, 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.) |
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