The most recent financial statements for Retro Machine, Inc., follow. Sales for 2010 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 are issued, what is the external financing needed to support the 20 percent growth rate in sales?
Answer to relevant QuestionsIn the previous problem, suppose the firm was operating at only 80 percent capacity in 2009. What is EFN now? Define the following: S = Previous year’s sales A = Total assets D = Total debt E = Total equity g = Projected growth in sales PM = Profit margin b = Retention (plowback) ratio Show that EFN can be written as: EFN = ...The most recent financial statements for Incredible Edibles, Inc., are shown here (assuming no income taxes): Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales ...What is the future value in three years of $1,800 invested in an account with a stated annual interest rate of 10 percent, a. Compounded annually? b. Compounded semiannually? c. Compounded monthly? d. Compounded ...What is the present value of $2,500 per year, at a discount rate of 8 percent, if the first payment is received 7 years from now and the last payment is received 30 years from now?
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