Chadron Motors has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.8 and the debt-equity ratio is .4. What is the sustainable rate of growth? A. 9.17 percent B. 9.84 percent C. 11.21 percent D. 10.52 percent E. 8.51 percent

Chadron Motors has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.8 and the debt-equity ratio is .4. What is the sustainable rate of growth? A. 9.17 percent B. 9.84 percent C. 11.21 percent D. 10.52 percent E. 8.51 percent

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 13P: Payne Products had $1.6 million in sales revenues in the most recent year and expects sales growth...

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Question

Chadron Motors has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.8 and the debt-equity ratio is .4. What is the sustainable rate of growth?

A. 9.17 percent

B. 9.84 percent

C. 11.21 percent

D. 10.52 percent

E. 8.51 percent

Chadron Co. wishes to maintain a growth rate of 9.89 percent a year, a constant debt-equity ratio of .42, and a dividend payout ratio of 40 percent. The ratio of total assets to sales is constant at 1.36. What profit margin must the firm achieve?

A. 13.73 percent

B. 14.37 percent

C. 8.13 percent

D. 14.79 percent

E. 13.31 percent

Chadron Markets is operating at full capacity with a sales level of $547,200 and fixed assets of $560,000. The profit margin is 5.4 percent. What is the required addition to fixed assets if sales are to increase by 4 percent?

A. $14,680

B. $10,709

C. $18,840

D. $16,760

E. $22,400

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