Youve collected the following information about Gandalf, Inc.: Sales = $295,000 Net income = $18,400 Dividends =
Question:
You’ve collected the following information about Gandalf, Inc.:
Sales = $295,000
Net income = $18,400
Dividends = $9,100
Total debt = $68,000
Total equity = $94,000
What is the sustainable growth rate for the company? If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? What growth rate could be supported with no outside financing at all?
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Step by Step Answer:
To find the sustainable growth rate we need the retention ratio and the return on equity The payout ...View the full answer
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Related Book For 
Essentials of Corporate Finance
ISBN: 978-1260013955
10th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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