Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 900 Costs 170 Interest 50 Taxes 120 Net income $ 560 BALANCE SHEET, YEAR-END   2018 2019   2018 2019 Assets $ 3,150 $ 3,450 Debt $ 1,050 $ 1,150       Equity 2,100 2,300 Total $ 3,150 $ 3,450 Total $ 3,150 $ 3,450 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? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. What is the sustainable growth rate? Note: 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
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Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its sales.

INCOME STATEMENT, 2019
Sales $ 900
Costs 170
Interest 50
Taxes 120
Net income $ 560
BALANCE SHEET, YEAR-END
  2018 2019   2018 2019
Assets $ 3,150 $ 3,450 Debt $ 1,050 $ 1,150
      Equity 2,100 2,300
Total $ 3,150 $ 3,450 Total $ 3,150 $ 3,450
  1. 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?

    Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

  2. What is the sustainable growth rate?

    Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

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