The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume thatEagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2020. The tax rate willremain constant.Income StatementSalesCostsPretax incomeTaxes (at 40.0%)Net income2019Net assets $5,400Total$3,3501,450$1,900760$1,140Balance Sheet, Year-End2018$5,100$5,400 $5,1002019$2,2003,200DebtEquityTotal $5,4006.42 x %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 for2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)X Answer is complete but not entirely correct.Internal growth rate2018$2,1003,000$ 5,100b. What is the sustainable growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent roundedto 2 decimal places.)X Answer is complete but not entirely correct.Sustainable growth rate9.40 %

The growth rate which can obtained without any external funding required is the sustainable growth…

The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assum Eagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2020. The tax emain constant. Income Statement Sales Costs Pretax income Taxes (at 40.0%) Net income Net assets Total $3,350 1,450 $1,900 760 $1,140 Balance Sheet, Year-End 2018 $5,100 2019 $5,400 $5,400 $5,100 2019 $2,200 Debt Equity 3,200 Total $5,400 2018 $2,100 3,000 $5,100

The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assum Eagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2020. The tax emain constant. Income Statement Sales Costs Pretax income Taxes (at 40.0%) Net income Net assets Total $3,350 1,450 $1,900 760 $1,140 Balance Sheet, Year-End 2018 $5,100 2019 $5,400 $5,400 $5,100 2019 $2,200 Debt Equity 3,200 Total $5,400 2018 $2,100 3,000 $5,100

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

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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 to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2023. The tax rate will remain constant. Income Statement Sales Costs $ 4,550 2,050 Pretax income Taxes (at 30.0%) $ 2,500 750 Net income $ 1,750 Balance Sheet, Year-End 2022 Net assets $ 6,600 2021 $ 6,300 Total $ 6,600 $ 6,300 Debt Equity Total 2022 $ 2,800 3,800 2021 $ 2,700 3,600 $ 6,600 $ 6,300 a. Assume that the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at two-thirds. What is the internal growth rate for 2023? b. What is the sustainable growth rate for 2023? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Internal growth rate b. Sustainable growth rate % %
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