1) Your firm has sales of $10,000,000, net income of $800,000, total assets of $10,000,000, and equity of $4,000,000. Your firm projects an increase in sales of 15 percent and has a dividend payout ratio of 40 percent? What is the sustainable growth rate, g?

2) Barneycle’s Boat Shop sells 4,000 of its glow-in-the-dark boats each year and has fixed order costs of $220.9 per order. Carrying cost per boat is $200 per year. What is the optimal order quantity for these boats?

3) The personal tax rate on debt is 21% and the personal tax on equity is 10%. The corporate tax rate is 16%. There is a firm, initially with no debt and market value $3 billion. This firm decides to issue $200 million of perpetual risk-free debt paying the risk free interest rate of 3%. The proceeds from the sale of debt are used to buy back shares. What is the gain from such leverage, GL?