Calculate the company sustainable growth rate

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A company with $60 million in assets is funded with $40 million in equity and $20 million in debt. Last year it made $9 million in net income, 25% of which is paid as dividends. Net income increases at the same rate as assets and the company's current liabilities do not change as the company grows, meaning that it will be funding the growth with equity, debt, or a mix of equity and debt.

Calculate the company's debt to equity ratio, taking it to two decimal points (xx.xx%, or 0.xxxx).

Calculate the company's Internal Growth Rate. Grow the company by the Internal Growth Rate and recalculate its debt to equity ratio.

Calculate the company's Sustainable Growth Rate. Grow the company by the Sustainable Growth Rate and recalculate its debt to equity ratio.

Reference no: EM131552872

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