Million $ 1. (30 points) The following graph shows the difference between the increase in assets minus the increase in spontaneous liabilities as well as the addition to retained earnings for Corporation X. Assume company does not sell new stock or buyback stock in what follows. a) (5 points) What is the internal growth rate for Corporation X? Change in (Assets - Spon Liab) b) (5 points) Is it possible for this company to have a sustainable growth rate of 8%? Why or why not? Retained Earnings c) (10 points) Assume for this part of the question that the sustainable growth rate is 22%. At this growth rate, the projected total stockholders' equity is $900 million, and projected total debt is $900 million. What is the total debt now (before the growth occurs)? 220 Change in 180 110 100 40 32 12 4 Growth Rate d) (10 points) If over the course of next year, the market has a high demand for stock X and the price increases in the secondary market, how would this affect the company's equity? 0% 3% 8% 10% 14% 18% 22% Million $ 1. (30 points) The following graph shows the difference between the increase in assets minus the increase in spontaneous liabilities as well as the addition to retained earnings for Corporation X. Assume company does not sell new stock or buyback stock in what follows. a) (5 points) What is the internal growth rate for Corporation X? Change in (Assets - Spon Liab) b) (5 points) Is it possible for this company to have a sustainable growth rate of 8%? Why or why not? Retained Earnings c) (10 points) Assume for this part of the question that the sustainable growth rate is 22%. At this growth rate, the projected total stockholders' equity is $900 million, and projected total debt is $900 million. What is the total debt now (before the growth occurs)? 220 Change in 180 110 100 40 32 12 4 Growth Rate d) (10 points) If over the course of next year, the market has a high demand for stock X and the price increases in the secondary market, how would this affect the company's equity? 0% 3% 8% 10% 14% 18% 22%