Problem 1 Sustainable Growth Rate [LO3] Cambria, Inc., had equity of $145,000 at the beginning of the year. At the end of the year, the company had total assets of $275,000. During the year, the company sold no new equity. Net income for the year was $26,000 and dividends were $5,500. What is the sustainable growth rate for the company? What is the sustainable growth rate if you use the formula ROE X b and beginning of period equity? What is the sustainable growth rate if you use end of period equity in this formula? Is this number too high or too low? Why? Problem 2 Sustainable Growth and Outside Financing [LO3] You've collected the follow- ing information about Odyssey, Inc.: Sales = $165,000 Net income $14,800 Dividends = $9,300 Total debt = $68,000 Total equity = $51,000 What is the sustainable growth rate for the company? If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? What growth rate could be supported with no outside financing at all? Problem 3 Growth and Profit Margin [LO3] Abacus Co. wishes to maintain a growth rate of 13 percent per year, a debt-equity ratio of 1.20, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at 95. What profit margin must the firm achieve