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 2023. The tax rate willremain constant.SalesIncome StatementCosts$ 2,7501,150Pretax incomeTaxes (at 30.0%)$ 1,600480Net income$ 1,1202021Balance Sheet, Year-End2022Net assets$ 4,800 $ 4,500DebtTotal$ 4,800 $ 4,500EquityTotal2022$ 1,9002,9002021$1,8002,700$ 4,800 $4,500a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds. What is the internalgrowth 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 rateb. Sustainable growth rate%%

Internal growth rate refers to the growth increase up to maximum level from the available resources…

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 $2,750 1,150 $1,600 480 Sales Costs Pretax income Taxes (at 30.0%) Net income $ 1,120 Balance Sheet, Year-End Net assets 2022 2021 $ 4,800 $4,500 2022 Total $ 4,800 $4,500 Debt Equity Total 2021 $1,900 $ 1,800 2,900 2,700 $ 4,800 $4,500 a. Assume that the dividend payout ratio is fixed at 50% 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?

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 $2,750 1,150 $1,600 480 Sales Costs Pretax income Taxes (at 30.0%) Net income $ 1,120 Balance Sheet, Year-End Net assets 2022 2021 $ 4,800 $4,500 2022 Total $ 4,800 $4,500 Debt Equity Total 2021 $1,900 $ 1,800 2,900 2,700 $ 4,800 $4,500 a. Assume that the dividend payout ratio is fixed at 50% 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?

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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