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O file:///cusers/saras oneDrie Desktop/Spnng%202019%20term financeho me ork%202.pdf 2 COMPUTERFIELD CORPORATION has the following financial statements for fiscal year 2018. The firm forecasts 20% sales growth next year and every item wil grow accordingly, EXCEPT that the debt will stay unchanged COMPUTERFIELD CORPORATION Financial Statements Income Statement 2018 Balance Sheet 12/31/2018 Sales Costs Taxable income Taxes (20%) Net income $1,000 Assets $3,000 Debt $1,500 Equity 1500 $160 Total $3,000 Total $3,000 800 200 40 1) Is this growth feasible without external financing? If not, how much external financing is needed? A feasible, EFN-0 B. NOT feasible, EFN-$108 C. NOT feasible, EFN $165.6 D. NOT feasible, EFN $408 E. NOT feasible. EFN-$4656 2) All conditions same, what growth rate can the firm achieve in 2019 without the external financing you just computed? In both 1) and 2), assume that firm pays NO dividend A 3.88% 563% C 807% D 1194% D. 11 94% 3) Redo 2) if in 2019, dividend payout will be 30% of the Net Income (bonus practice, you just need to slightly adjust your equation when dividend payout comes into play) A 3 88% B. 5.63% C. 8.07% D. 11.94% As CFO of FINC LLC, you forecast company's growth for the year 2019 Sales, all income statement items and Assets will grow by the same percentage; The firm will grow in 2019 with internally generated capital ONLY, without taking on any additional debt or equity financing No dividend payout is expected in 2019. 3. 1) Find this growth rate, which is called Internal Growth Rate A. 34% B. 5.0% C. 6.8% D. 10% 2) Use this growth rate to complete 2019 financial statements -fill up all numbers missing. Ensure the numbers add up. FINC LLC Financial Statements Income Statement Balance Sheet 2018 End Assets $2,520 2019 End projected 2018 End Debt $1,200 2019 End projected Projected 2018 2019 $1,000 850 Sales Costs 1) Find this growth rate, which is called Internal Growth Rate A 3.4% B. 5.0% C. 6.8% D. 10% 2) Use this growth rate to complete 2019 financial statements -fill up all numbers missing. Ensure the numbers add up. FINC LLC Financial Statements Income Statement Balance Sheet Projected 2019 2019 End projected 2019 End projected 2018 2018 2018 End End $1,000 Sales Costs Taxable income Taxes (20%) Net income Assets $2,520 Debt $1,200 150 Equity $1,320 30 $120 Total $2,520 Total $2,520

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