The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Assume a growth rate of 15% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Income Statement Sales Costs Pretax income Taxes (at 28.60) Net income Net assets Total $ 950 250 $ 700 200 $ 500 Year-End Debt Equity $3,000 $2,700 Total $3,000 $2,700 Balance Sheet, 2021 2022 $3,000 $2,700 a. Internal growth rate b. Sustainable growth rate 2022 $ 1,000 2,000 a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. % % 2021 $ 900 1,800
The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Assume a growth rate of 15% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Income Statement Sales Costs Pretax income Taxes (at 28.60) Net income Net assets Total $ 950 250 $ 700 200 $ 500 Year-End Debt Equity $3,000 $2,700 Total $3,000 $2,700 Balance Sheet, 2021 2022 $3,000 $2,700 a. Internal growth rate b. Sustainable growth rate 2022 $ 1,000 2,000 a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. % % 2021 $ 900 1,800
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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Subject:- finance
Transcribed Image Text:The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that
Eagle's assets are proportional to its sales. Assume a growth rate of 15% in revenue, expenses, and assets in 2023. The tax rate will
remain constant.
Income Statement
Sales
Costs
Pretax income
Taxes (at 28.6%)
Net income
Net assets
Total
$ 950
250
$ 700
200
$ 500
Balance Sheet,
2021
2022
$3,000 $2,700
Year-End
Debt
Equity
$ 3,000 $2,700 Total $3,000
a. Internal growth rate
b. Sustainable growth rate
2022
$ 1,000
2,000
a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internal
growth rate for 2023?
b. What is the sustainable growth rate for 2023?
Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
%
%
2021
$ 900
1,800
$2,700
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