The relationship between Firm Z's growth potential and its external financing needed is: EFN = –2,275 + 147,725g What is the growth rate when EFN is zero? Multiple Choice 20% 5.25% 0% 1.54% 64.93%
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The relationship between Firm Z's growth potential and its external financing needed is:
EFN = –2,275 + 147,725g
What is the growth rate when EFN is zero?
-
20%
-
5.25%
-
0%
-
1.54%
-
64.93%
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- What is the sustainable growth rate if the ROE is 17% and the payout ratio is 25%. а. 12.79% b. 8.00% с. 14.61% d. 8.62%Suppose Micro-Shave growth rate in sales is forecast as 13% rather than 10%. If all ratios stay the same, what is the AFN? Sales growth rate So Ao / So Lo / So Profit margin (M) Payout ratio O $ 170.74 O $240.50 O $ 205.62 O None of these are correct 13% $3,000 million 66.666% 6.667% 3.783% 50.670%6. Is it possible to value the company below using the constant growth model? Why or why not? Explain. rf=5% rm 17% beta=0.8 DO = $1 g=50%
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- A firm wants a sustainable growth rate of 3.13 percent while maintaining a dividend payout ratio of 27 percent and a profit margin of 6 percent. The firm has a capital intensity ratio of 2. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth? Multiple Choice O OO OO 69 times 61 times 73 times 20 times 39 timesCalculate the Terminal Value using the Perpetual growth Method Cost of Capital using WACC = 11.02% Terminal growth rate = 3%• Exercise 13.3 P416-445 a. Calculate the price of a firm with a plowback ratio of .60 if its ROE is 20%. Current earnings E., will be $5 per share, and k = 12.5%. b. What if ROE is 10%, which is less than the market capitalization rate? Compare the firms price in this instance to that of a firm with the same ROE and E, but a plowback ratio of b=0.
- A firm wishes to maintain an sustainable growth rate of 10 percent and a dividend payout ratio of 56 percent. The ratio of total assets to sales is constant at 1.1, and the profit margin is 9.6 percent. If the firm also wishes to maintain a constant debt-equity ratio, what must it be? Multiple Choice О 5.86 О 1.37 О 6.86 4.86 3.86Assume the following ratios are constant. Total asset turnover Profit margin Equity multiplier Payout ratio = || || || || Sustainable growth rate = = 2.27 5.5% 1.74 What is the sustainable growth rate? Note: Do not round intermediate calculations and enter your answer as a percent 38% %Furniture Inc. has a beta coefficient of 0.7 and a required rate of return of 15%. The market risk premium is currently 5%. If the inflation premium increases by 2%, and Furniture Inc. acquires new assets that increase its beta by 50%, what will be Furniture Inc.'s new required rate of return? 14.50% а. b. 22.85% С. 18.75% d. 15.35% Plastic Inc.'sstock has an estimated beta of 2 with arequired rate of return is 12%. Paper Inc.'s stock has a beta of 1, and the risk-free rate is 2%. Determine the required rate of return on Paper Inc.'s stock? 7.0% а. b. 8.4% c. 10.0% d. 11.5% Company K has a beta of 1.6, while Company L's beta is 0.7. The risk-free rate is 7%, and current market premium is 5%. Currently, the expected rate of inflation built into the risk-free rate rises by 1%, the real risk-free rate remains constant, and the required return on the market rises to 14%. There is no change in the betas of both company. When these changes occurs, by how much will the required return on…