The internal rate of growth is based on the assumption that: the dividend amount is held...
The internal rate of growth is based on the assumption that:
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the dividend amount is held constant. |
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no external funding of any type is obtained. |
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the return on equity is held constant. |
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the only additional outside capital obtained is long-term debt. |
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the debt-equity ratio is held constant. |
Homework Answers
The internal rate of growth is based on the assumption that : no external funding of any typer is obtaine.
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The internal rate of growth is based on the assumption that:
the dividend amount is held...
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm...
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions? ОА. New debt and external equity, provided the debt-equity ratio remains constant OB. No new external financing of any kind OC No new equity and a constant debt-equity ratio OD New debt and external equity in equal proportions ОЕ. No new debt but additional external equity equal to the increase in retained earnings
The dividend growth model tells us that for a stock, if there is an increase in...
The dividend growth model tells us that for a stock, if there is an increase in its ___________________, it will result in a dcrease in the current value of the stock. number of future dividends, provided the total number of dividends is less than infinite dividend growth rate both the discount rate and the dividend growth rate dividend amount discount rate As Dell is currently producing its products at its full capacity, it cannot produce and sell more without adding...
The sustainable growth rate of a firm is best described as the _____ growth rate achievable...
The sustainable growth rate of a firm is best described as the _____ growth rate achievable _____. A maximum; excluding external financing of any kind B maximum; with unlimited debt financing C minimum; assuming a 100 percent retention ratio D minimum; if the firm maintains a constant equity multiplier E maximum; excluding any external equity financing while maintaining a constant debt-equity ratio
The residual dividend policy approach to dividend policy is based on the theory that a firm’s...
The residual dividend policy approach to dividend policy is
based on the theory that a firm’s optimal dividend distribution
policy is a function of the firm’s target capital structure, the
investment opportunities available to the firm, and the
availability and cost of external capital. The firm makes
distributions based on the residual earnings.
Consider the case of Red Bison Petroleum Producers Group:
Red Bison Petroleum Producers Group is expected to generate
$140,000,000 in net income over the next year. Red...
19. HoosierMart earns a profit and it adopts a dividend payout ratio of 30%. It has...
19. HoosierMart earns a profit and it adopts a dividend payout ratio of 30%. It has no plan on issuing additional stocks (equity shares) or bonds (long-term debt) at this time. Thus, ______________ is the maximum rate at which it can currently grow. A internal growth rate (1 − .30) B sustainable growth rate (1 − .30) C internal growth rate D sustainable growth rate E zero percent
ALL PART OF SINGLE QUESTION Historical growth rate estimation Dividend $2.00 $2.50 $2.90 $3.20 $3.60 a....
ALL PART OF SINGLE QUESTION Historical growth rate estimation Dividend $2.00 $2.50 $2.90 $3.20 $3.60 a. What is the compound growth rate of dividends based on the last five years of dividends data? (2 marks) Dividend $2.00 $2.50 $2.90 $3.20 $3.60 b. Calculate the year-to-year growth rates in dividends. (2 marks) There are growth periods c. What is the average year-to-year dividend growth rate? (1 mark) d. ABC has a retention ratio of 0.75 and a historical return on equity...
a firm wishes to maintain an internal growth rate of 6.75 percent and a dividend payout...
a firm wishes to maintain an internal growth rate of 6.75 percent and a dividend payout ratio of 31 percent. the current profit margin is 5.3 percent and the firm uses no external financing sources what must total asset turnover be
answer for problem 7 calculating Internal Growth [LO3] The most recent financial statements for Live Co. are shown h...
answer for problem 7
calculating Internal Growth [LO3] The most recent financial statements for Live Co. are shown here: Income Statement Sales $13,250 Costs 9,480 Taxable income $ 3,770 Taxes (40%) 1,508 Net income $2,262 Current assets Fixed assets Total Balance Sheet $10,400 Debt 28,750 Equity $39,150 Total $17,500 21,650 $39,150 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible. What...
LO3 20. Calculating Internal Growth. The most recent financial statements for Shinoda Manufacturing Co. are shown...
LO3 20. Calculating Internal Growth. The most recent financial statements for Shinoda Manufacturing Co. are shown here: Income Statement Balance Sheet $ 29,000 Debt 91,400 Equity $120,400 Total $ 38,400 82,000 $120,400 $87,600 64,350 $23,250 8,138 $15,112 Sales Costs Taxable income Tax (35%) Net Income Current assets Fixed assets Total Assets and costs are proportional to sales. Debt and equity are not. The com pany maintains a constant 40 percent dividend payout ratio. No external fi- nancing is possible. What...
20. Calculating Internal Growth, The most recent financial statements for Shinoda Manufacturing Co. are shown here:...
20. Calculating Internal Growth, The most recent financial statements for Shinoda Manufacturing Co. are shown here: LO 3 Balance Sheet Income Statement $ 38,400 Debt $ 29,000 $87,600 Current assets Sales 82,000 Equity 91,400 Fixed assets 64,350 Costs $120,400 Total $120,400 Total $23,250 Taxable income 8,138 Tax (35%) $15,112 Net Income Assets and costs are proportional to sales. Debt and equity are not. The com- pany maintains a constant 40 percent dividend payout ratio. No external fi- nancing is possible....
QUESTION 19 The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions? ОА. New debt and external equity, provided the debt-equity ratio remains constant OB. No new external financing of any kind OC No new equity and a constant debt-equity ratio OD New debt and external equity in equal proportions ОЕ. No new debt but additional external equity equal to the increase in retained earnings
answer for problem 7
calculating Internal Growth [LO3] The most recent financial statements for Live Co. are shown here: Income Statement Sales $13,250 Costs 9,480 Taxable income $ 3,770 Taxes (40%) 1,508 Net income $2,262 Current assets Fixed assets Total Balance Sheet $10,400 Debt 28,750 Equity $39,150 Total $17,500 21,650 $39,150 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible. What...
LO3 20. Calculating Internal Growth. The most recent financial statements for Shinoda Manufacturing Co. are shown here: Income Statement Balance Sheet $ 29,000 Debt 91,400 Equity $120,400 Total $ 38,400 82,000 $120,400 $87,600 64,350 $23,250 8,138 $15,112 Sales Costs Taxable income Tax (35%) Net Income Current assets Fixed assets Total Assets and costs are proportional to sales. Debt and equity are not. The com pany maintains a constant 40 percent dividend payout ratio. No external fi- nancing is possible. What...
20. Calculating Internal Growth, The most recent financial statements for Shinoda Manufacturing Co. are shown here: LO 3 Balance Sheet Income Statement $ 38,400 Debt $ 29,000 $87,600 Current assets Sales 82,000 Equity 91,400 Fixed assets 64,350 Costs $120,400 Total $120,400 Total $23,250 Taxable income 8,138 Tax (35%) $15,112 Net Income Assets and costs are proportional to sales. Debt and equity are not. The com- pany maintains a constant 40 percent dividend payout ratio. No external fi- nancing is possible....
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