Sol_ch2_3_4

Sol_ch2_3_4 - (1/1) (1 + D/E); D/E = 0.95 19. Retention...

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Ch2. CECAD / EEDBB / DBEAB Ch3. BDECA / DEACC / ABEBC Ch4. ECBAC / CDBCD / BDADE / CAEEE 17. Projected total assets = $25,460 × 1.04 = $26,478.40 Projected accounts payable = $2,470 × 1.04 = $2,568.80 Projected retained earnings = $4,190 + [($3,420 - $1,368) × 1.04] = $6,324.08 External financing need = $26,478.40 - $2,568.80 - $8,800 - $10,000 - $6,324.08 = -$1,214.48 18. Retention ratio = 1 - 0.62 = 0.38 Sustainable growth rate = 0.08 = (ROE × 0.38)/[1 - (ROE × 0.38)]; ROE = 0.1949 Return on equity = 0.1949 = 0.10
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Unformatted text preview: (1/1) (1 + D/E); D/E = 0.95 19. Retention ratio = 1 - 0.24 = 0.76 Internal growth rate = 0.11 = (ROA 0.76)/[1 - (ROA 0.76)]; ROA = 0.1304 Return on assets = 0.1304 = 0.10 TAT; Total asset turnover = 1.30 times 20. Ending equity = $150,000 + ($72,000 - $44,640) = $177,360 Return on equity = $72,000/$177,360 = 0.4060 Retention ratio = ($72,000 - $44,640)/$72,000 = 0.38 Sustainable growth rate = (0.4060 0.38)/[1 - (0.4060 0.38)] = 18.24 percent...
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