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The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, Costs include interest. Assume that Eagle's assets are proportional
The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2020. The tax rate will remain constant. Income Statement Sales $3,350 Costs 1,450 Pretax income $1,900 Taxes (at 40.0%) 760 Net income $1,140 Balance Sheet, Year-End 2019 Net assets $5,400 2018 $5,100 Total $5,400 $5,100 Debt Equity Total 2019 $2,200 3,200 $5,400 2018 $2,100 3,000 $5,100 a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed. What is the internal growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Internal growth rate 6.42% b. What is the sustainable growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Sustainable growth rate 9.40 %
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