Question
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2017 Sales $ 1,550 Costs 300
Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales. INCOME STATEMENT, 2017 Sales $ 1,550 Costs 300 Interest 40 Taxes 250 Net income $ 960 BALANCE SHEET, YEAR-END 2016 2017 2016 2017 Assets $ 4,000 $ 4,300 Debt $ 1,300 $ 1,400 Equity 2,700 2,900 Total $ 4,000 $ 4,300 Total $ 4,000 $ 4,300 a. Find Eagles required external funds if it maintains a dividend payout ratio of 60% and plans a growth rate of 20% in 2018. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If Eagle chooses not to issue new shares of stock, what variable must be the balancing item? Debt Interest Dividends Retained earnings c. What will be the value of this balancing item? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Now suppose that the firm plans instead to increase long-term debt only to $1,500 and does not wish to issue any new shares of stock. What is now the balancing item? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Debt Interest Dividends Retained earnings e. What will be the value of this new balancing item?
I really need help with D. Thank you!
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