Plank%u2019s Plants had net income of $4,000 on sales of $70,000 last year. The firm paid a dividend of $1,480. Total assets were $200,000, of which $80,000 was financed by debt.
| a. |
What is the firm%u2019s sustainable growth rate? (Do not round intermediate calculations. Round your answer to 1 decimal place.) |
| Sustainable growth rate | % |
| b. |
If the firm grows at its sustainable growth rate, how much debt will be issued next year? (Do not round intermediate calculations.) |
| New debt | $ |
| c. |
What would be the maximum possible growth rate if the firm did not issue any debt next year? (Do not round intermediate calculations. Round your answer to 1 decimal place.) |
| Maximum growth rate | % |