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Income Statement Assumptions: 1. Sales are $100,000. 2. Operating expenses are 75% of sales. 3. Eagle's interest rate is 10%. 4. Eagle faces a
Income Statement Assumptions: 1. Sales are $100,000. 2. Operating expenses are 75% of sales. 3. Eagle's interest rate is 10%. 4. Eagle faces a 20% tax rate. Balance Sheet Assumptions: 1. Current assets are 25% of sales. 2. The fixed asset turnover ratio is 1.25. 3. The current ratio is 2.0. 4. Eagle issued $50,000 in common stock. Questions: a) What are total assets? b) If the company borrows $40,000 in long-term debt what is the plug for dividends? c) Based on your answer in question (b) what is the company's internal sustainable growth rate? d) If instead the company does not pay dividends what is the plug for long-term debt?
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