Surmec, Inc., reported sales of $2.1 million last year. The companys primary business is the manufacture of

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Surmec, Inc., reported sales of $2.1 million last year. The company’s primary business is the manufacture of nuts and bolts. Since this is a mature industry, analysts are confident that sales will grow at a steady rate of 7 percent per year. The company’s net income equals 23 percent of sales. Management would like to buy a new fleet of trucks but can only do so once the net income reaches $620,000 a year. At the end of what year will Surmec be able to buy the trucks? What will sales and net income be in that year?

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Fundamentals of Corporate Finance

ISBN: 978-1119371403

4th edition

Authors: Robert Parrino, David S. Kidwell, Thomas Bates

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