Now if increase in sales is projected to be 20 and it is


A firm has decided that its optimal capital structure is 100% equity financed. The firm's asset is $100,000; asset turnover (sales/assets) is 0.8. If increase in sales is projected to be 10%, and sustainable growth rate is 5%,

a) Calculate the required external financing that the firm needs.

b) Now, if increase in sales is projected to be 20%, and it is required to have $6,000 more to finance increase in sales, what will be the sustainable growth rate of this firm?

 

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Finance Basics: Now if increase in sales is projected to be 20 and it is
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