70.2K

Verified Solution

Link Copied!

Problem 19-10 Required External Financing (L04) Here are the abbreviated financial statements for Planners Peanuts: Sales Costs Income Statement, 2015 $2,252 1,520 Net income $ 732 2014 $2,836 Balance Sheet, Year-End 2015 $4,606 Debt Equity Assets 2014 $965 $1,871 2015 $1,613 2,993 Total $2,836 $4,606 Total $2,836 $4,606 If the dividend payout ratio is fixed at 50%, calculate the required total external financing for growth rates in 2016 of 15%, 20%, and 25%. (Round your answers to 3 decimal places.) 15% 20% 25% Growth Rate Required external financing Here are the abbreviated financial statements for Planners Peanuts: Income Statement, 2015 Sales Costs Net income $2,580 1,275 $1,305 2014 $2,736 Assets Balance Sheet, Year-End 2015 $3,386 Debt Equity $3,386 Total 2014 $917 1,819 $2,736 2015 $1,348 2,038 $3,386 Total $2,736 a. What is the maximum possible growth rate in 2016 for Planners Peanuts if the payout ratio is fixed at 58% and no external debt or equity is to be issued? (Do not round intermediate calculations. Round your answer to 1 decimal place.) The maximum possible growth rate What is the maximum possible growth rate in 2016 for Planners Peanuts if the payout ratio is fixed at 58% and the firm maintains its 2015 debt-to-equity ratio but issues no equity? (Do not round intermediate calculations. Round your answer to 1 decimal place.) The maximum possible growth rate b. Calculate the required external financing for the two growth rates. (Do not round intermediate calculations. Round your answers to 1 decimal place.) Required external financing for the first growth rates Required external financing for the second growth rate

Answer & Explanation Solved by verified expert

See Answer