Question

# You’ve collected the following information about Erna, Inc.: Sales = \$ 305,000 Net income = \$...

You’ve collected the following information about Erna, Inc.:

 Sales = \$ 305,000 Net income = \$ 18,200 Dividends = \$ 7,000 Total debt = \$ 65,000 Total equity = \$ 96,000

What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Sustainable growth rate             %

Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt–equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What growth rate could be supported with no outside financing at all? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Growth rate             %

Calculate the growth rate and additional borrowing as follows:

Formulas:

#### Earn Coins

Coins can be redeemed for fabulous gifts.