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s2008m [1.1K]
4 years ago
13

The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Sales $ 20,700 Current assets

$ 12,060 Debt $ 16,780 Costs 14,200 Fixed assets 34,200 Equity 29,480 Taxable income $ 6,500 Total $ 46,260 Total $ 46,260 Taxes (24%) 1,560 Net income $ 4,940 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 40 percent dividend payout ratio.
Business
1 answer:
givi [52]4 years ago
6 0

Question : What is sustainable growth Rate

Answer:

Sustainable growth Rate = 1.69 %

Explanation:

Sustainable growth Rate = Return on Equity x Retention Rate

Where Return on Equity = Asset Utilization Rate x Profitability Rate x Financial Utilization Rate

Asset Utilization Rate= Total Sales/Total Assets

                                   = 20,700/46,260 = 0.45

Profitability Rate = Net Income/ Total Assets

                           = 4,940/46,260 = 0.11

Financial Utilization Rate = total debt/ Total equity

                                          = 16,780/ 29,480 = 0.57

Return on Equity = 0.45 x 0.11 x 0.57

                             =0.028

Retention Rate = 1- dividend pay out ratio

                         = 1-0.40

                         = 0.60

Sustainable growth Rate = 0.028 x 0.60

                                           = 1.69 %

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Answer:

0.097 OR 9.7%

Explanation:

Cost of Equity using CAPM-

Re = Rf + Beta (Rpm)

where,

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Therefore,

Re = .06 + .9 (.04)

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Unlevered cost of equity:

ReU = Wd × rd + We × re

where,

ReU = Unlevered cost of equity,

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Therefore,

ReU = 0.20 × 8% + .80 × 9.6%

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Levered cost of Equity:

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6 0
3 years ago
A country finds itself in the following situation: the government budget surplus is 2% of its GDP; private savings is 30% of GDP
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Answer:

The current account deficit will increase from 1% to 31% of GDP.

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Here, the government saving or surplus and private savings are the supply of financial capital and investment indicates demand for financial capital.

The current account balance is

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3 years ago
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Answer:

mary

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