1. Neal's Nails has Total Assets of $150,000, Net Income of $16,500, and dividends of $4,950. What is the firms Internal Growth rate? Can the firm grow at 8 percent without raising external funds and why? (Hint: Need to compute the payout ratio, fraction reinvested, and ROA).

8.34 percent; No, because 8 percent < Internal Growth Rate

8.34 percent; Yes, because 8 percent < Internal Growth Rate

3.41 percent; No, because 8 percent > Internal Growth Rate

No idea

2. A firm has net working capital of $600, net fixed assets of $2,400, sales of $8,000, and current liabilities of $800. How many dollars worth of sales are generated from every $1 in total assets? Is the firm more or less efficient than its competitor that has a Total Asset Turnover of 2.45?

2.11, less efficient

2.11, more efficent

1.44, less efficient

2.67, less efficient

2.67, more efficient