Problem 3-32 Internal and Sustainable Growth Rates (LG3-6)

Use the following financial statements for Lake of Egypt Marina, Inc.

LAKE OF EGYPT MARINA, INC. Balance Sheet as of December 31, 2015 and 2014 (in millions of dollars)
	2015			2014				2015			2014
Assets							Liabilities and Equity
Current assets:							Current liabilities:
Cash and marketable securities	$	75		$	65		Accrued wages and taxes	$	40		$	43
Accounts receivable		115			110		Accounts payable		90			80
Inventory		200			190		Notes payable		80			70
Total	$	390		$	365		Total	$	210		$	193
Fixed assets:							Long term debt:	$	300		$	280
Gross plant and equipment	$	580		$	471		Stockholders equity:
Less: Depreciation		110			100		Preferred stock (5 million shares)	$	5		$	5
							Common stock and paid-in surplus (65 million shares)		65			65
Net plant and equipment	$	470		$	371		Retained earnings		330			242
Other long-term assets		50			49
Total	$	520		$	420		Total	$	400		$	312
Total assets	$	910		$	785		Total liabilities and equity	$	910		$	785

LAKE OF EGYPT MARINA, INC. Income Statement for Years Ending December 31, 2015 and 2014 (in millions of dollars)
	2015			2014
Net sales (all credit)	$	515		$	432
Less: Cost of goods sold		230			175
Gross profits	$	285		$	257
Less: Other operating expenses		30			25
Other operating expenses
Earnings before interest, taxes, depreciation, and amortization (EBITDA)	$	255		$	232
Less: Depreciation		22			20
Earnings before interest and taxes (EBIT)	$	233		$	212
Less: Interest		33			30
Earnings before taxes (EBT)	$	200		$	182
Less: Taxes		57			55
Net income	$	143		$	127
Less: Preferred stock dividends	$	5		$	5
Net income available to common stockholders	$	138		$	122
Less: Common stock dividends		65			65
Addition to retained earnings	$	73		$	57
Per (common) share data:
Earnings per share (EPS)	$	2.123		$	1.877
Dividends per share (DPS)	$	1.000		$	1.000
Book value per share (BVPS)	$	6.077		$	4.723
Market value (price) per share (MVPS)	$	14.750		$	12.550

Calculate the internal and sustainable growth rate for Lake of Egypt Marina, Inc. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Internal growth rate	%
Sustainable growth rate	%