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Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2019 Sales $ 950 Costs 250
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales.
INCOME STATEMENT, 2019 | |
Sales | $ 950 |
---|---|
Costs | 250 |
Interest | 50 |
Taxes | 150 |
Net income | $ 500 |
BALANCE SHEET, YEAR-END | |||||
2018 | 2019 | 2018 | 2019 | ||
---|---|---|---|---|---|
Assets | $ 2,700 | $ 3,000 | Debt | $ 900 | $ 1,000 |
Equity | 1,800 | 2,000 | |||
Total | $ 2,700 | $ 3,000 | Total | $ 2,700 | $ 3,000 |
a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 70% and the equity-to-asset ratio is fixed at 2/3?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
b. What is the sustainable growth rate?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
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