Questions from Corporate Finance

Q: A firm wishes to maintain an internal growth rate of 6.

A firm wishes to maintain an internal growth rate of 6.4 percent and a dividend payout ratio of 25 percent. The current profit margin is 5.7 percent, and the firm uses no external financing sources. W...

Q: What happens to the future value of a perpetuity if interest rates

What happens to the future value of a perpetuity if interest rates increase? What if interest rates decrease?

Q: In Question 1, assume the company pays out half of net

In Question 1, assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements and determi...

Q: Based on the following information, calculate the sustainable growth rate for

Based on the following information, calculate the sustainable growth rate for Hendrix Guitars, Inc.: Profit margin = 5.9% Total asset turnover = 1.15 Total debt ratio = .45 Payout ratio = 40%

Q: You’ve collected the following information about Caccamisse, Inc.: Sales

You’ve collected the following information about Caccamisse, Inc.: Sales = $255,000 Net income = $19,200 Dividends = $7,500 Total debt = $67,000 Total equity = $77,000 What is the sustainable growth r...

Q: Deprey, Inc., had equity of $153,000 at

Deprey, Inc., had equity of $153,000 at the beginning of the year. At the end of the year, the company had total assets of $215,000. During the year, the company sold no new equity. Net income for the...

Q: Calculate the internal growth rate for the company in Problem 22.

Calculate the internal growth rate for the company in Problem 22. Now calculate the internal growth rate using ROA × b for both beginning of period and end of period total assets. What do you observe?...

Q: The most recent financial statements for Crosby, Inc., follow.

The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will...

Q: In Problem 24, suppose the firm was operating at only 80

In Problem 24, suppose the firm was operating at only 80 percent capacity in 2020. What is EFN now? Problem 24: The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are proje...

Q: In Problem 24, suppose the firm wishes to keep its debt

In Problem 24, suppose the firm wishes to keep its debt-equity ratio constant. What is EFN now? Problem 24: The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected...