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Problem 3-43 Sustainable Growth and Outside Financing [LO 3]
Youve collected the following information about Caccamisse, Incorporated:
Sales = $ 260,000
Net income = $ 17,300
Dividends = $ 6,100
Total debt = $ 56,000
Total equity = $ 87,000
What is the sustainable growth rate for the company assuming no external equity is allowed?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.
Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Note: this is tricky! You must determine how much assets will grow based on the growth rate in the first answer (remember assets = debt and equity). Then, multiply the new assets by the original total debt ratio (total liabilities / assets).)
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.
What growth rate could be supported with no outside financing at all?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.

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