
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:tes
Assets
Total
2018
$ 3,300
$ 3,300
Internal growth rate
BALANCE SHEET, YEAR-END
2019
$ 3,600
$3,600
Debt
Equity
Total
Sustainable growth rate
a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at
2/3? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
%
2018
$ 1,100
2,200
$3,300
2019
$ 1,200
2,400
$ 3,600
b. What is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2
decimal places.)
%

Transcribed Image Text:Eagle Sports Supply has the following financial statements. Assume that Eagle's assets are proportional to its sales.
INCOME STATEMENT, 2019
Sales
Costs
Interest
Taxes
Net income
Assets
Total
$ 950
180
60
130
$ 580
Internal growth rate
BALANCE SHEET, YEAR-END
2019
Debt
Equity
Total
2018
$ 3,300 $ 3,600
$3,300 $ 3,600
2018
$ 1,100
2,200
$3,300
a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at
2/3? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
%
2019
$ 1,200
2,400
$3,600
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