CHAPTER 4 PROBLEM SET 1. Simply Red, Inc. has a return on equity of 14%, a dividend payout ratio of 20%, an equity multiplier of 1.4, and a profit margin of 1.29. What is the sustainable krowth rate? 2.09 2.9% A) B) D) 5.3% 8.79% 12.690 2. Given the following information sales - $450, costs - $350. tax rate - 34%. retention ratio = 30%, production - 95% of capacity, sales increase - 10%. What is the expected addition to retained earnings? (Assume costs change directly with sales.) B) $ 1.98 $11.22 $19.80 $21.78 $50.82 D) E) 3 Given the following information: current assets = $400: fixed assets = $500: accounts payable = $100: notes payable = $45: long-term debt = $455: equity = $300; sales = $450; costs = $400; tax rate = 34%. Suppose that current assets, costs, and accounts payable maintain a constant ratio to sales. If the firm is producing at 80% capacity. what is the total external financing needed if sales increase 25%? Assume the firm pays no dividends. A) $ 33.75 B) $ 66.25 C) $143.75 D) $172.50 E) $380.25