# FIN 571 Week 3 Connect Problems - Assignment

## FIN 571 Week 3 Connect Problems - Assignment

1. If the Hunter Corp. has an ROE of 13 and a payout ratio of 30 percent, what is its sustainable growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Sustainable growth rate ____%

2. The most recent financial statements for Williamson, Inc., are shown here (assuming no income taxes):
Income Statement Balance Sheet
Sales \$ 6,700 Assets \$22,050 Debt \$ 8,050
Costs 3,850 Equity 14,000
Net income \$ 2,850 Total \$22,050 Total \$22,050
Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be \$7,906.
What is the external financing needed? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
External financing needed \$_____

3. Projected future ﬁnancial statements are called:
• plug statements.
• pro forma statements.
• reconciled statements.
• aggregated statements.
• comparative statements.

4. One of the primary weaknesses of many ﬁnancial planning models is that they:
• rely too much on ﬁnancial relationships and too little on accounting relationships.
• are iterative in nature.
• ignore the goals and objectives of senior management.
• ignore cash payouts to stockholders.
• ignore the size, risk, and timing of cash ﬂows.

5. The maximum rate at which a ﬁrm can grow while maintaining a constant debt-equity ratio is bestdeﬁned by its:
• rate of return on assets.
• internal rate of growth.
• average historical rate of growth.
• rate of return on equity.
• sustainable rate of growth.

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6. The external funds needed (EFN) equation projects the addition to retained earnings as:
• PM × ? Sales.
• PM ×? Sales × (1 - d).
• PM × Projected sales × (1 - d).
• Projected sales × (1 - d).
• PM ×Projected sales.

7. Financial planning, when...