You\'ve collected the following information about Draiman, inc: What is the sust

Question

You've collected the following information about Draiman, inc: 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.). If it does grow 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.) What growth rate could be supported with no outside financing at all? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Explanation / Answer

Internal Growth Rate = Retained Earnings / Total Assets

here retained earnings = Net Income-Dividends-= $ 14200-$ 9100=$ 5100

Total Assets = $ 82000+$ 63000=$ 145000

so Internal Growth Rate=5100/145000 =0.0352 or 3.52%

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