Problem 18-16 Feasible Growth Rates (LO3)

Eagle Sports Supply has the following financial statements. Assume that Eagles assets are proportional to its sales.

INCOME STATEMENT, 2019
Sales	$	950
Costs		180
Interest		60
Taxes		130
Net income	$	580

BALANCE SHEET, YEAR-END
	2018				2019					2018				2019
Assets	$	3,300			$	3,600			Debt	$	1,100			$	1,200
									Equity		2,200				2,400
Total	$	3,300			$	3,600			Total	$	3,300			$	3,600

a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at 2/3? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. What is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)