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Plank's Plants had net income of $5,000 on sales of $56,000 last year. The firm paid a dividend of $700. Total assets at the end
Plank's Plants had net income of $5,000 on sales of $56,000 last year. The firm paid a dividend of $700. Total assets at the end of last year were $140,000, of which $60,000 was financed by debt. Assume that ROE from last year will continue this year and no new equity was issued during the year. a. What is the firm's sustainable growth rate? (Round your answer to 3 decimal places.) Sustainable growth rate % b. If the firm grows at its sustainable growth rate, how much hebt will have to be raised in the coming Ichthebt year? (Round your answer to 1 decimal place.) Debt increase $ What is the current debt/assets rate? (Round your answer to 2 decimal places.) Debt/assets rate last year What will be the debt/assets rate coming year? (Round your answer to 2 decimal places.) Debt/assets rate coming year c. 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 your answer to 3 decimal places.) The maximum possible growth rate % 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 your answer to 3 decimal places.) The maximum possible growth rate %
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