Determine firmrsquos maximum sustainable growth, Ask an Expert

Finance

problem: Suppose a firm has a net income in 20×9 of $20 and its end of year 20×8 total assets were USD 450. Further assume that the firm has a standing requirement to maintain a debt or equity ratio of 0.8, & that its manager is prohibited from further borrowing or stock issuance.

[A] Determine firm’s maximum sustainable growth rate?

[B] If the firm uses $12 of the USD 20 net income to repurchase some of its outstanding shares, now determine its maximum sustainable growth rate?

[C] If the firm takes action as described in part b and c, determine its maximum sustainable growth rate be?

[D] If the firm pays $6 of the $20 net income as a dividend, and plans to maintain this payout ratio into the future, now determine its maximum sustainable growth rate?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M916278

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Let us consider a 5 million position in silver in addition

Let us consider a $5 million position in silver. In addition, let us consider that the returns of gold are normally distributed (Gaussian) . The standard deviation of silver returns on a daily basis is 0.45%. How much ca ...

Explain how the company newmans own brand fulfills the

Explain how the company Newman's Own brand fulfills the definition of a business for profit and a non-profit business at the same time. Consider in the response the functions of business, entrepreneurship and production ...

A using an hp 12c calculator what are the correct steps to

a) Using an hp 12c calculator, what are the correct steps to calculate IRR entered as monthly payments and if summed up for a year? b) Using an hp 12c calculator, what is the best way to calculate effective interest rate ...

Corporate financewhich publicly traded stock in your

Corporate finance Which publicly traded stock in your opinion is well-positioned to perform well next year? Why?

Susan is considering the expansion of her picture framing

Susan is considering the expansion of her picture framing business to include the printing of oversize pictures from CDs. she would need to lease equipment, at a cost of $186 per month. to process the pictures, she estim ...

You want to borrow 103000 from your local bank to buy a new

You want to borrow $103,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $2,350, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 54-month ...

Please show formula and detailed explanationyou have just

Please show formula and detailed explanation. You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 11.1 percent, compounded a ...

Question - a evaluate the coefficients of a linear

Question - a. Evaluate the coefficients of a linear regression equation (i.e., the intercept and slope) for projecting the trend of NPM's annual receipts for 2000 to 2007. Provide a complete specification for the linear ...

What is the effective annual rate of a savings account that

What is the effective annual rate of a savings account that pays an APR of 3% and compounds quarterly? Answer in percent and round to two decimal places.

You deposit 286 dollars in an account every year for 4

You deposit 286 dollars in an account every year for 4 years that earns 4 percent annual interest. What is the present value of your deposits today (the present value of the annuity at time 0)? (your first deposit will b ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert