You\'ve collected the following information about Ema, Inc. Sales Net income Div

Question

You've collected the following information about Ema, Inc. Sales Net income Dividends Total debt Total equity = $ 285,000 $ 17,800 - 6,600 $ 61,000 $ 92,000 Requirement 1: What is the sustainable growth rate for the company? (Do not round intermediate calculations.Enter your answer as a percent rounded to 2 decimal places (e.g.. 32.16)-) Sustainable growth rate 1386W 1386196 Requirement 2: Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Additional borrowing

Explanation / Answer

New TA = 1.1386 (61000 + 92000) = 174206

New TD = [ D / (D +E) ] (TA)

= 61000 / (61000 + 92000) (174206)

= 69455

Additional borrowing = 69455 - 61000 = 8455.

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