Determine what is the particular growth rate for next year

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Reference no: EM132634838

Intro - Your company's most recent income statement and balance sheet are given below:

Income statement ($ million)        Balance sheet ($ million)

Sales 23                     Current assets 12.2           Debt 18.3

Costs 18.4                   Fixed assets 48.8           Equity 42.7

Net income 4.6           Total assets 61                   Total 61

Sales, assets and costs are expected to grow by the same rate next year, while company expects to keep its debt-equity ratio constant. The company is expected to pay NO dividends next year.

Problem 1: What is the particular growth rate for the next year, at which company will need zero eternal financing (EFN = 0)? What is the internal growth rate?

Reference no: EM132634838

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