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Plank's Plants had a net income of $5000 on sales of $70,000 last year. The firm paid a dividend of $800. Total assets at the
Plank's Plants had a net income of $5000 on sales of $70,000 last year. The firm paid a dividend of $800. Total assets at the end of last year were $200,000, of which $87,000 was financed by debt. Assume that ROE from last year will continue this year and no new equity was issued during this year.
A. What is the firm's sustainable growth rate. (Round all calculations to 3 decimal places and all final answers to 2 decimal places)
B. If the firm grows at its sustainable growth rate, how much that will have to be raised in the coming year? (Round your calulcatuons to 3 decimal places and the final answer to 2 decimal places)
C. What is the current debt/assets ratio (Round calculations to 3 decimal places and final answer to 2 decimal places)
D. What would be the maximum possible growth rate if the firm did not sell any new debt or equity in the coming year and maintains the dividend payout ratio? (Round calculations to 3 decimal places and final answer to 2 decimal places)
E. What would be the maximum possible growth rate if the firm did not sell any new debt or equity in the coming year and retains all earnings (Round calculations to 3 decimal places and final answer to 2 decimal places)
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