bbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 14% in 2019 and all assets and liabilities increase correspondingly. Income Statement Sales $ 7,000 Costs, including interest 5,000 Net income $ 2,000 Balance Sheet, Year-End 2018 2017 2018 2017 Net assets $ 6,125 $ 5,700 Debt $ 2,625 $ 2,533 Equity 3,500 3,167 Total $ 6,125 $ 5,700 Total $ 6,125 $ 5,700 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.) 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 growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
bbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 14% in 2019 and all assets and liabilities increase correspondingly. Income Statement Sales $ 7,000 Costs, including interest 5,000 Net income $ 2,000 Balance Sheet, Year-End 2018 2017 2018 2017 Net assets $ 6,125 $ 5,700 Debt $ 2,625 $ 2,533 Equity 3,500 3,167 Total $ 6,125 $ 5,700 Total $ 6,125 $ 5,700 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.) 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 growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 14% in 2019 and all assets and liabilities increase correspondingly.
| Income Statement | ||
| Sales | $ | 7,000 |
| Costs, including interest | 5,000 | |
| Net income | $ | 2,000 |
| 2018 | 2017 | 2018 | 2017 | |||||||||
| Net assets | $ | 6,125 | $ | 5,700 | Debt | $ | 2,625 | $ | 2,533 | |||
| Equity | 3,500 | 3,167 | ||||||||||
| Total | $ | 6,125 | $ | 5,700 | Total | $ | 6,125 | $ | 5,700 | |||
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.)
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 growth rate for Archimedes? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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