Question 1

The most recent financial statements for Live Co. are shown here:

Income Statement		Balance Sheet
Sales	$12,000	Current assets	$25,876	Debt	$25,502
Costs	7,200	Fixed assets	18,106	Equity	18,480
Taxable income	$4,800	Total	$43,982	Total	$43,982
Taxes (34%)	1,632
Net income	$3,168

Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 32 percent dividend payout ratio. No external equity financing is possible.

Required:

What is the sustainable growth rate? (Do not round your intermediate calculations.)

rev: 09_17_2012

5.15 %

13.2 %

5.8 %

12.7 %

13.7 %

Question 2

Consider the following information for Kaleb's Kickboxing:

Profit margin	9.2%
Capital intensity ratio	0.58
Debtequity ratio	0.62
Net income	$33,000
Dividends	$18,150

Required:

Calculate the sustainable growth rate? (Do not round your intermediate calculations.)

rev: 09_17_2012

16.56%

8.27%

5.62%

13.08%

13.58%