The most recent financial statements for Fleury, Inc., follow. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate insales?
Answer to relevant QuestionsIn Problem 24, suppose the firm wishes to keep its debt- equity ratio constant. What is EFN now?Based on the result in Problem 30, show that the internal and sustainable growth rates are as given in the chapter. Hint: For the internal growth rate, set EFN equal to zero and solve for g .In October 2010, automobile manufacturer BMW announced plans to invest $750 million to increase production at its South Carolina plant by 50 percent. BMW apparently felt that it would be better able to compete and create ...A project that provides annual cash flows of $17,300 for nine years costs $79,000 today. Is this a good project if the required return is 8 percent? What if it’s 20 percent? At what discount rate would you be indifferent ...Slow Ride Corp. is evaluating a project with the following cash flows:Year Cash Flow 0.... $29,0001.... 11,2002.... 13,9003.... 15,8004.... 12,9005.... -9,400The company uses a 10 percent interest rate on all of its ...
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