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The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, Costs include interest. Assume that Eagles assets are proportional to
The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, Costs include interest. Assume that Eagles assets are proportional to its sales. Assume a growth rate of 35% in revenue, expenses, and assets in 2018. The tax rate will remain constant.
INCOME STATEMENT | |
Sales | $3,550 |
Costs | $1,550 |
Pretax income | $2,000 |
Taxes (at 30.0%) | $600 |
Net income | $1,400 |
Balance Sheet Year End | |||||
2017 | 2016 | 2017 | 2016 | ||
Assets | $5,600 | $5,300 | Debt | $2,300 | $2,200 |
Equity | $3,300 | $3,100 | |||
Total | $5,600 | $5,300 | Total | $5,600 | $5,300 |
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 2018? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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