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Eagle Sports Supply has the following financial statements Assume that Eagle s assets are proportional to its sales INCOME STATEMENT 2015 Sales

Eagle Sports Supply has the following financial statements. Assume that Eagle s assets are proportional to its sales. INCOME STATEMENT, 2015 Sales .................. $950 Costs .................. 250 Interest .................. 50 Taxes .................. 150 Net income .......... $500 a. Find Eagle s required external funds if it maintains a dividend payout ratio of 70% and plans a growth rate of 15% in 2016. b. If Eagle chooses not to issue new shares of stock, what variable must be the balancing item? What will its value be? c. Now suppose that the firm plans instead to increase long-term debt only to $1,100 and does not wish to issue any new shares of stock. Why must the dividend payment now be the balancing item? What will its value be?

Apr 01 2020 Read more Less More

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