15. If a company has a 15 percent ROE and a 10 percent payout ratio, what is its sustainable growth rate?

a.

13.56%

b.

16.51%

c.

15.61%

d.

15.89%

35. Mike Haven has $50 million invested in fixed assets and generates sales of $60 million. Currently the company is working at only 80 percent of capacity. How much investment in fixed assets would be required to support a 50 percent expansion in sales?

a.

$12 million

b.

$10 million

c.

$11 million

d.

$9 million

16. MADA Inc., is currently operating at only 85 percent of fixed asset capacity. Current sales are $630,000. How much can sales increase before any new fixed assets are needed?

a.

176,111

b.

$741,176

c.

$176,741

d.

111,176

18. ABC Corporation has earnings of $2 million. It planned to payout dividends of $1.2 million to shareholders. The company has a historical return on equity of 16%. What is the firm growth in dollars on earning next year?

a.

$186,576

b.

$450,687

c.

$315,987

d.

$212,8000

36. The purpose of the pro-forma financial statements.

a.

Is very important for the firm to have a valid decision

b.

Is to calculate the plug for the additional funds needed

c.

Is to have a new picture of the finance of the firm in order to get external funds

d.

Is to mitigate losses by doing such a thing