Question

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

Sales $ 230,000

Net income $ 15,200

Dividends $ 9,600

Total debt $ 92,000

Total equity $ 68,000

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

2. If it does grow 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. Round your answer to 2 decimal places, e.g., 32.16.) Additional borrowing $

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

Answer 1