In Problem 24, suppose the firm wishes to keep its debt-equity ratio constant. What is EFN now?
Question:
In Problem 24, suppose the firm wishes to keep its debt-equity ratio constant. What is EFN now?
Problem 24
The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate in sales?
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To keep the debtequity ratio constant any increase in assets must be financed by an increase in l...View the full answer
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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