Posted: January 29th, 2016
Use the following information for the Lowell, Inc. for this and the next two questions.
Use the following information for the Lowell, Inc. for this and the next two questions.
| Sales |
$200,000
|
| Debt |
95,000
|
| Dividends |
5,000
|
| Equity |
40,000
|
| Net income |
16,000
|
What is the company’s sustainable growth rate? |
 |
| |
| |
Student Response |
|
a.
|
19.29% |
|
b.
|
09.24% |
|
c.
|
37.93% |
|
d.
|
08.87% |
|
| Score: |
1/1 |
| |
|
29.
|
|
| |
| How much additional debt will Lowell Inc.require to keep the current debt-equity ratio constant if the company were to grow at the sustainable growth rate? |
|
| |
| |
Student Response |
|
a.
|
186,206 |
|
b.
|
131,034 |
|
c.
|
36,034 |
|
d.
|
887,954 |
|
| Score: |
1/1 |
| |
|
30.
|
|
| |
| At what growth rate could the Lowell Inc. grow if it did not wish to increase the amount of debt? |
|
| |
| |
Student Response |
|
a.
|
19.29% |
|
b.
|
09.24% |
|
c.
|
37.93% |
|
d.
|
08.87%
|
|
| Score: |
1/1 |
|
