What is the maximum possible growth rate for Archimedes (see Problem 8) if the payout ratio is set at 50% and
(a) No external debt or equity is to be issued?
(b) The firm maintains a fixed debt ratio but issues no equity?
Problem 8
Abbreviated financial statements for Archimedes Levers are shown in Table 29.12 on the next page. If sales increase by 10% in 2014 and all other items, including debt, increase correspondingly, what must be the balancing item? What will be its value?
TABLE 29.12

Transcribed Image Text:

Income Statement Sales $4,000 3,500 Costs, including interest Net income $500 Balance Sheet, Year-end 20132012 2013 2012 1200 033 S3,200 $2,700 Debt Equity Total sets 200 2700 2,000 $3,200 1,667 $2,700 Total $3,200 $2,700