Q&A Hero

Q: You are depositing $4,500 today at an annual interest rate of 7.2 percent. How much additional interest will you earn if you leave the money invested for 45 years instead of 40 years? A) $25,723.08 B) $30,185.14 C) $22,441.56 D) $6,370.69 E) $11,590.93

Q: You just received a $5,000 gift from your grandmother which you have decided to save and then gift to your grandchildren 50 years from now. How much additional money will you gift if you earn 7.5 percent interest rather than 7 percent interest over the next 50 years? A) $39,318.09 B) $39,464.79 C) $38,211.16 D) $37,811.99 E) $38,663.60

Q: You will receive $15,000 in two years when you graduate. You plan to invest this at an annual interest rate of 6.5 percent. How much money will you have 8 years from now? A) $24,824.94 B) $19,381.16 C) $21,887.13 D) $23,209.19 E) $20,414.73

Q: You have a savings account valued at $1,500 today that earns an annual interest rate of 8.7 percent. How much more would this account be worth if you wait to spend the entire balance in 25 years rather than in 20 years? A) $6,306.16 B) $4,658.77 C) $3,311.18 D) $6,907.17 E) $4,117.64

Q: You just invested $49,000 that you received as an insurance settlement. How much more will this account be worth in 40 years if you earn an average return of 7.6 percent rather than just 7.1 percent? A) $59,818.92 B) $98,509.16 C) $140,423.33 D) $155,986.70 E) $138,342.91

Q: This morning, DJ's invested $225,000 to help fund future projects. How much additional money will the firm have three years from now if it can earn an annual interest rate of 4 percent rather than 3.5 percent? A) $3,391.90 B) $3,632.88 C) $3,008.17 D) $4,219.68 E) $3,711.08

Q: You hope to buy your dream car five years from now. Today, that car costs $62,500. You expect the price to increase by an average of 2.9 percent per year. How much will your dream car cost by the time you are ready to buy it? A) $73,340.00 B) $68,666.67 C) $72,103.59 D) $66,818.02 E) $69,023.16

Q: You own a classic car currently valued at $64,000. If the value increases by 2.5 percent annually, how much will the car be worth 15 years from now? A) $94,035.00 B) $86,008.17 C) $80,013.38 D) $92,691.08 E) $91,480.18

Q: Today, you earn a salary of $31,000. What will be your annual salary ten years from now if you receive annual raises of 2.2 percent? A) $38,536.36 B) $37,414.06 C) $38,235.24 D) $37,122.08 E) $36,736.00

Q: What is the future value of $11,600 invested for 17 years at 7.25 percent compounded annually? A) $32,483.60 B) $27,890.87 C) $38,991.07 D) $41,009.13 E) $38,125.20

Q: Travis invested $8,000 in an account that pays 4 percent simple interest. How much more could he have earned over a 7-year period if the interest had compounded annually? A) $291.41 B) $287.45 C) $302.16 D) $266.67 E) $258.09

Q: You invested $6,500 at 6 percent simple interest. How much more could you have earned over a 10-year period if the interest had compounded annually? A) $1,049.22 B) $930.11 C) $1,182.19 D) $1,201.15 E) $1,240.51

Q: Marti's coin collection contains fifty 1948 silver dollars. Her grandparents purchased them at their face value in 1948. These coins have appreciated by 7.6 percent annually. How much will the collection be worth in 2025? A) $13,611.18 B) $18,987.56 C) $14,122.01 D) $11,218.27 E) $14,077.16

Q: Alex invested $2,550 in an account that pays 5 percent simple interest. How much money will he have at the end of four years? A) $2,650.00 B) $3,100.26 C) $3,060.00 D) $3,250.00 E) $3,099.54

Q: Al invested $3,630 in an account that pays 6 percent simple interest. How much money will he have at the end of five years? A) $4,910 B) $5,056 C) $4,719 D) $4,678 E) $5,299

Q: Phillippe invested $1,000 ten years ago and expected to have $1,800 today He has neither added nor withdrawn any money since his initial investment. All interest was reinvested and compounded annually. As it turns out, he only has $1,680 in his account today. Which one of the following must be true? A) He earned simple interest rather than compound interest. B) He earned a lower interest rate than he expected. C) He did not earn any interest on interest as he expected. D) He ignored the Rule of 72 which caused his account to decrease in value. E) The future value interest factor turned out to be higher than he expected.

Q: What is the relationship between the present value and future value interest factors? A) The present value and future value factors are equal to each other. B) The present value factor is the exponent of the future value factor. C) The future value factor is the exponent of the present value factor. D) The factors are reciprocals of each other. E) There is no relationship between these two factors.

Q: Which one of these will increase the present value of a set amount to be received sometime in the future? A) Increase in the time until the amount is received B) Increase in the discount rate C) Decrease in the future value D) Decrease in the interest rate E) Decrease in both the future value and the number of time periods

Q: Which one of the following will produce the lowest present value interest factor? A) 6 percent interest for 5 years B) 6 percent interest for 8 years C) 6 percent interest for 10 years D) 8 percent interest for 5 years E) 8 percent interest for 10 years

Q: Your goal is to have $1 million in your retirement savings on the day you retire. To fund this goal, you will make one lump sum deposit today. If you plan to retire ________ rather than ________ and earn a ________ rate of interest, then you can deposit a smaller lump sum today. A) sooner; later; low B) sooner; later; high C) later; sooner; high D) later; sooner; low E) today; later; high

Q: Which one of the following variables is the exponent in the present value formula? A) Present value B) Future value C) Interest rate D) Number of time periods E) There is no exponent in the present value formula.

Q: Chang Lee is going to receive $20,000 six years from now. Soo Lee is going to receive $20,000 nine years from now. Which one of the following statements is correct if both individuals apply a discount rate of 7 percent? A) The present values of Chang Lee's and Soo Lee's money are equal. B) In future dollars, Soo Lee's money is worth more than Chang Lee's money. C) In today's dollars, Chang Lee's money is worth more than Soo Lee's. D) Twenty years from now, the value of Chang Lee's money will equal the value of Soo Lee's money. E) Soo Lee's money is worth more than Chang Lee's money given the 7 percent discount rate.

Q: Your grandmother has promised to give you $10,000 when you graduate from college. If you speed up your graduation by one year and graduate two years from now rather than the expected three years, the present value of this gift will: A) remain constant. B) increase. C) decrease. D) equal $10,000. E) be less than $10,000.

Q: This afternoon, you deposited $1,000 into a retirement savings account. The account will compound interest at 6 percent annually. You will not withdraw any principal or interest until you retire in 40 years. Which one of the following statements is correct? A) The interest you earn in Year 6 will equal the interest you earn in Year 10. B) The interest amount you earn will double in value every year. C) The total amount of interest you will earn will equal $1,000 .06 40. D) The present value of this investment is equal to $1,000. E) The future value of this amount is equal to $1,000 (1 + 40).06.

Q: Sam just opened a savings account paying 3.5 percent interest, compounded annually. After four years, the savings account will be worth $5,000. Assume there are no additional deposits or withdrawals. Given this, Sam: A) will earn the same amount of interest each year for four years. B) will earn simple interest on his savings every year for four years. C) could have deposited less money today and still had $5,000 in four years if the account paid a higher rate of interest. D) has an account currently valued at $5,000. E) could earn more interest on this account if the interest earnings were withdrawn annually.

Q: The process of determining the present value of future cash flows in order to know their value today is referred to as: A) compound interest valuation. B) interest on interest valuation. C) discounted cash flow valuation. D) future value interest factoring. E) complex factoring.

Q: Steve just computed the present value of a $10,000 bonus he will receive next year. The interest rate he used in his computation is referred to as the: A) current yield. B) effective rate. C) compound rate. D) simple rate. E) discount rate.

Q: Terry is calculating the present value of a bonus he will receive next year. The process he is using is called: A) growth analysis. B) discounting. C) accumulating. D) compounding. E) reducing.

Q: Kurt won a lottery and will receive $1,000 a year for the next 50 years. The current value of these winnings is called the: A) single amount. B) future value. C) present value. D) simple amount. E) compounded value.

Q: Renee invested $2,000 six years ago at 4.5 percent interest. She spends all of her interest earnings immediately so she only receives interest on her initial $2,000 investment. Which type of interest is she earning? A) Free interest B) Complex interest C) Simple interest D) Interest on interest E) Compound interest

Q: The interest earned on both the initial principal and the interest reinvested from prior periods is called: A) free interest. B) dual interest. C) simple interest. D) interest on interest. E) compound interest.

Q: Art invested $100 two years ago at 8 percent interest. The first year, he earned $8 interest on his $100 investment. He reinvested the $8. The second year, he earned $8.64 interest on his $108 investment. The extra $.64 he earned in interest the second year is referred to as: A) free interest. B) bonus income. C) simple interest. D) interest on interest. E) present value interest.

Q: Christina invested $3,000 five years ago and earns 2 percent annual interest. By leaving her interest earnings in her account, she increases the amount of interest she earns each year. The way she is handling her interest income is referred to as: A) simplifying. B) compounding. C) aggregating. D) accumulating. E) discounting.

Q: You are investing $100 today in a savings account. Which one of the following terms refers to the total value of this investment one year from now? A) Future value B) Present value C) Principal amount D) Discounted value E) Invested principal

Q: Nan and Neal are twins. Nan invests $5,000 at 7 percent at age 25. Neal invests $5,000 at 7 percent at age 30. Both investments compound interest annually. Both twins retire at age 60 and neither adds nor withdraws funds prior to retirement. Which statement is correct? A) Nan will have less money when she retires than Neal. B) Neal will earn more interest on interest than Nan. C) Neal will earn more compound interest than Nan. D) If both Nan and Neal wait to age 70 to retire they will have equal amounts of savings. E) Nan will have more money than Neal at any age.

Q: Andy deposited $3,000 this morning into an account that pays 5 percent interest, compounded annually. Barb also deposited $3,000 this morning at 5 percent interest, compounded annually. Andy will withdraw his interest earnings and spend it as soon as possible. Barb will reinvest her interest earnings into her account. Given this, which one of the following statements is true? A) Barb will earn more interest in Year 1 than Andy will. B) Andy will earn more interest in Year 3 than Barb will. C) Barb will earn more interest in Year 2 than Andy. D) After five years, Andy and Barb will both have earned the same amount of interest. E) Andy will earn compound interest.

Q: Country Comfort, Inc. has equity of $168,500, total assets of $195,000, net income of $63,000, and dividends of $37,800. What is the sustainable growth rate? A) 14.33 percent B) 10.78 percent C) 21.60 percent D) 12.76 percent E) 17.59 percent

Q: Basic Motors has a profit margin of 5.6 percent, a total asset turnover of 1.76, a total debt ratio of .2, and a dividend payout ratio of .7. What is the sustainable growth rate? A) 4.68 percent B) 3.84 percent C) 2.12 percent D) 3.49 percent E) 4.41 percent

Q: A firm wishes to maintain an internal growth rate of 11 percent and a dividend payout ratio of 24 percent. The current profit margin is 7 percent and the firm uses no external financing sources. What is the total asset turnover (TAT)? A) 0.87 times B) 0.90 times C) 1.01 times D) 1.15 times E) 1.86 times

Q: A firm wishes to maintain a growth rate of 8 percent and a dividend payout ratio of 62 percent. The ratio of total assets to sales is constant at 1, and the profit margin is 10 percent. What must the debt-equity ratio be if the firm wishes to keep these ratios constant? A) .05 B) .40 C) .55 D) .60 E) .95

Q: Fix-It Co. wishes to maintain a growth rate of 9.89 percent a year, a constant debt-equity ratio of .42, and a dividend payout ratio of 40 percent. The ratio of total assets to sales is constant at 1.3. What profit margin must the firm achieve? A) 8.13 percent B) 13.46 percent C) 13.73 percent D) 14.33 percent E) 14.74 percent

Q: Leon's has a total asset turnover of 1.46 percent, a profit margin of 8 percent, an equity multiplier of 1.2, and a dividend payout ratio of 32 percent. What is the sustainable growth rate? A) 10.30 percent B) 10.53 percent C) 10.67 percent D) 10.89 percent E) 11.01 percent

Q: Christina's has a profit margin of 7.5 percent, a capital intensity ratio of .8, a debt-equity ratio of .6, net income of $31,000, and dividends paid of $15,810. What is the sustainable rate of growth? A) 4.94 percent B) 5.29 percent C) 7.93 percent D) 6.42 percent E) 3.58 percent

Q: Parodies Corp. has a return on assets of 10.9 percent, a return on equity of 16.7 percent, and a retention ratio of 40 percent. What is its sustainable growth rate? A) 8.68 percent B) 9.25 percent C) 7.49 percent D) 7.16 percent E) 8.87 percent

Q: The Soccer Shoppe has a return on assets of 9 percent, a return on equity of 11.3 percent, and a payout ratio of 22 percent. What is its internal growth rate? A) 7.72 percent B) 5.08 percent C) 8.49 percent D) 6.23 percent E) 7.55 percent

Q: RPJ Co. has net income of $2,937, a profit margin of 6.3 percent, a retention ratio of 45 percent, total assets of $52,800, and total debt of $24,300. Assets, current liabilities, and costs are proportional to sales. The company maintains a constant dividend payout ratio and debt-equity ratio and is operating at full capacity. What is the maximum dollar increase in sales that can be sustained next year assuming no new equity is issued? A) $2,151 B) $1,211 C) $2,804 D) $2,267 E) $1,667

Q: Cold Ice has a profit margin of 8.3 percent and a payout ratio of 42 percent. The firm has annual sales of $386,400, current liabilities of $37,200, long-term debt of $123,800, and net working capital of $16,700, and net fixed assets of $391,500. No external equity financing is possible. What is the internal growth rate? A) 5.91 percent B) 3.44 percent C) 4.36 percent D) 4.02 percent E) 6.14 percent

Q: Jamestowne Boats has a profit margin of 6.2 percent, a payout ratio of 30 percent, an ROA of 14.2 percent, and an ROE of 18.6 percent. This firm maintains a constant payout ratio and is currently operating at full capacity. What is the maximum rate at which the firm can grow without acquiring any additional external financing? A) 12.74 percent B) 11.04 percent C) 13.02 percent D) 14.97 percent E) 9.94 percent

Q: Roy's Welding has annual sales of $96,700, a profit margin of 7.45 percent, and a payout ratio of 40 percent. The firm has $11,500 of debt and owners' equity of $31,200. What is the internal growth rate for this firm assuming the payout ratio remains constant? A) 9.70 percent B) 13.87 percent C) 7.31 percent D) 7.49 percent E) 11.26 percent

Q: Flo's Flowers has annual sales of $61,888, depreciation of $8,100, interest paid of $970, cost of goods sold of $29,400, taxes of $4,918, and dividends paid of $4,810. The firm has total assets of $105,300 and total debt of $51,600. The firm does not want any additional external equity financing and also wants to maintain a constant debt-equity ratio. What rate of growth can this firm maintain? A) 27.16 percent B) 12.27 percent C) 34.22 percent D) 13.27 percent E) 23.82 percent

Q: SLG, Inc., has annual sales of $40,934, depreciation of $3,100, interest paid of $750, cost of goods sold of $22,400, taxes of $3,084, and dividends paid of $4,060. The firm has total assets of $55,300 and total debt of $32,600. The firm wants to maintain a constant payout ratio but does not want to incur any additional external financing. What is the firm's maximum rate of growth? A) 15.79 percent B) 16.18 percent C) 11.49 percent D) 9.03 percent E) 13.97 percent

Q: Nielsen's has annual sales of $352,400 and a profit margin of 5.2 percent. The firm has beginning owners' equity of $136,400 and ending owners' equity of $139,900. The firm neither sold nor repurchased shares during the year. What is the firm's retention ratio? A) 26.87 percent B) 40.00 percent C) 36.67 percent D) 19.10 percent E) 23.33 percent

Q: The Dog House has net income of $3,450 and total equity of $8,600. The debt-equity ratio is .60 and the payout ratio is 30 percent. What is the internal growth rate? A) 14.47 percent B) 17.78 percent C) 21.29 percent D) 29.40 percent E) 33.33 percent

Q: The Two Sisters has a return on assets of 9 percent and a dividend payout ratio of 75 percent. What is the internal growth rate? A) 3.24 percent B) 4.05 percent C) 3.97 percent D) 2.30 percent E) 2.25 percent

Q: Cross Town Express has sales of $137,000, net income of $14,000, total assets of $98,000, and total equity of $45,000. The firm paid $7,560 in dividends and maintains a constant dividend payout ratio. Currently, the firm is operating at full capacity. All costs and assets vary directly with sales. The firm does not want to obtain any additional external equity. At the sustainable rate of growth, how much new total debt must the firm acquire? A) $0 B) $6,311 C) $6,989 D) $7,207 E) $8,852

Q: Frasier Cabinets wants to maintain a growth rate of 5 percent without incurring any additional equity financing. The firm maintains a constant debt-equity ratio of .55, a total asset turnover ratio of 1.30, and a profit margin of 9 percent. What must the dividend payout ratio be? A) 26.26 percent B) 38.87 percent C) 49.29 percent D) 61.13 percent E) 73.74 percent

Q: A firm has a retention ratio of 45 percent and a sustainable growth rate of 6.2 percent. The capital intensity ratio is 1.2 and the debt-equity ratio is .64. What is the profit margin? A) 6.28 percent B) 7.67 percent C) 9.49 percent D) 12.38 percent E) 14.63 percent

Q: Robotics desires a sustainable growth rate of 12.7 percent while maintaining a constant dividend payout ratio of 25 percent and a profit margin of 12 percent. The company has a capital intensity ratio of .95. What equity multiplier is required to achieve the company's desired rate of growth? A) .84 B) .98 C) 1.02 D) 1.19 E) 1.11

Q: Bill's has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.6 and the debt-equity ratio is .4. What is the sustainable rate of growth? A) 11.20 percent B) 9.60 percent C) 10.89 percent D) 9.26 percent E) 9.84 percent

Q: BK Metals is currently operating at full capacity. The profit margin and the dividend payout ratio are held constant. Net working capital and fixed assets vary directly with sales. The company currently has current liabilities of $3,950, long-term debt of $14,700, net working capital of $7,850, net fixed assets of $27,600, owners' equity of $20,750, net income of $2,900, and dividends paid of $870. What is the external financing need if sales increase by 11 percent? A) $896 B) $1,646 C) $972 D) −$145 E) −$768

Q: LM Products has total assets of $48,900, total debt of $21,750, long-term debt of $18,100, owners' equity of $27,150, dividends paid of $1,925, and net income of $5,500. Assume net working capital and all company costs increase directly with sales. Also assume the tax rate and the dividend payout ratio are constant and the company is currently operating at full capacity. What is the external financing need if sales increase by 4 percent? A) −$1,908 B) −$804 C) −$397 D) $1,201 E) $1,344

Q: Deep Hollow Mills has sales of $254,600 and a profit margin of 5.2 percent. The firm has retained earnings of $113,200 after paying its annual dividend of $7,500. What is the pro forma retained earnings for next year if this firm grows at a rate of 3.6 percent and both the profit margin and the dividend payout ratio remain constant? A) $117,704.74 B) $123,771.10 C) $113,592.08 D) $105,921.22 E) $119,145.81

Q: The Paper Mill is operating at full capacity. Assets, costs, and current liabilities vary directly with sales. The dividend payout ratio is constant. The firm has sales of $42,700, net income of $5,500, total assets of $48,900, current liabilities of $3,650, long-term debt of $18,100, owners' equity of $27,150, and dividends of $1,925. What is the external financing need if sales increase by 14 percent? A) −$1,816 B) −$1,268 C) $1,031 D) $3,504 E) $2,260

Q: Wilson's is currently operating at maximum capacity. The firm has a net income of $2,250, total assets of $24,600, long-term debt of $9,800, accounts payable of $2,700, dividends of $900, and total equity of $12,100. All costs, assets, and current liabilities vary directly with sales. The tax rate and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by 5 percent? A) −$323 B) −$467 C) $0 D) $108 E) $367

Q: James Mfg. is currently operating at only 86 percent of fixed asset capacity. Fixed assets are $387,000. Current sales are $510,000 and are projected to grow to $664,000. What amount must be spent on new fixed assets to support this growth in sales? A) $0 B) $22,654 C) $46,319 D) $79,408 E) $93,608

Q: Seaweed Mfg. is currently operating at only 84 percent of fixed asset capacity. Current sales are $550,000. What is the maximum rate at which sales can grow before any new fixed assets are needed? A) 17.23 percent B) 17.47 percent C) 18.03 percent D) 18.87 percent E) 19.05 percent

Q: The Atlantic Co. is an all-equity company with sales of $21,600, costs of $14,780, depreciation of $2,000, and taxes of $1,012. The dividend payout ratio is 12 percent. Sales are expected to increase by 22 percent next year. What is the pro forma addition to retained earnings assuming all costs vary proportionately with sales? A) $4,899 B) $3,745 C) $3,892 D) $4,011 E) $4,088

Q: Nu Tek has sales of $19,700, net income of $3,517, fixed assets of $18,282, current liabilities of $2,940, current assets of $3,018, long-term debt of $7,600, and equity of $10,760. Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 50 percent dividend payout ratio. Next year's sales are projected to increase by 7 percent. What is the amount of external financing needed if the firm is currently operating at full capacity? A) −$596 B) −$141 C) $583 D) $912 E) −$482

Q: LL Companies has sales of $9,800, net income of $1,060, total assets of $8,950, and total debt of $4,760. Assets and costs are proportional to sales. Debt and equity are not. A dividend of $371 was paid, and the company wishes to maintain a constant payout ratio. Next year's sales are projected to be $10,584. What is the amount of the external financing need? A) $716 B) $1,333 C) −$1,574 D) −$382 E) −$28

Q: Porter's Corner has sales of $4,650 net income of $490, total assets of $5,820, and total debt of $2,760. Assets and costs are proportional to sales. Debt and equity are not. No dividends or taxes are paid. Next year's sales are projected to be $5,487. What is the amount of the external financing needed? A) −$28 B) $469 C) $611 D) $1,048 E) $823

Q: Ausel's Cabinets has $27,600 in net fixed assets and is operating at 96 percent of capacity. Sales are $36,200 currently. What is the required increase in fixed assets if sales are projected to increase by 14 percent? A) $4,205 B) $3,400 C) $6,833 D) $0 E) $2,605

Q: The Mill Press is operating at 94 percent of its fixed asset capacity and has current sales of $611,000. How much can the firm grow before any new fixed assets are needed? A) 4.99 percent B) 5.78 percent C) 6.02 percent D) 6.38 percent E) 6.79 percent

Q: The Corner Store has sales of $68,900, dividends of $1,960, and net income of $4,900. The firm is expecting sales to decrease by 3 percent next year while the profit margin remains constant. The firm wants to increase the dividend payout ratio by a fixed 2.5 percent. What is the projected increase in retained earnings for next year? A) $1,711 B) $1,867 C) $2,733 D) $1,969 E) $3,438

Q: The Broom Maker currently has annual sales of $387,000 and is operating at 88 percent of capacity. The profit margin of 5.5 percent and the dividend payout ratio of 30 percent are projected to remain constant. What is the projected addition to retained earnings for next year based on a sales growth rate of 4.8 percent? A) $12,309 B) $15,615 C) $7,890 D) $6,692 E) $714

Q: Marco's has current annual sales of $52,600, net fixed assets of $38,900, and total assets of $56,300. The firm is currently operating at 79 percent of capacity. What is the capital intensity ratio at full capacity? A) 1.18 B) 1.10 C) .96 D) .91 E) .85

Q: Hench's has annual sales of $56,900 is currently operating at 86 percent of capacity. What is the full-capacity level of sales? A) $48,934 B) $47,740 C) $66,163 D) $105,834 E) $64,866

Q: The Outlet has a capital intensity ratio of .87 at full capacity. Currently, total assets are $48,900 and current sales are $53,600. At what level of capacity is the firm currently operating? A) 87.00 percent B) 91.67 percent C) 95.36 percent D) 96.08 percent E) 98.21 percent

Q: M&M Tools is currently operating at 88 percent of capacity. All costs and net working capital vary directly with sales. What is the amount of the pro forma net fixed assets for next year if sales are projected to increase by 13 percent and the firm currently has $33,600 of net fixed assets? A) $33,600 B) $33,412 C) $38,101 D) $37,968 E) $42,148

Q: Dexter's has annual sales of $53,800, current assets of $18,900, and net working capital of $2,800. Assume this firm is operating at full capacity and that all costs, net working capital, and fixed assets vary directly with sales. The debt-equity ratio and the dividend payout ratio are constant. What is the pro forma current liabilities value for next year if sales are projected to increase by 7.5 percent? A) $13,650 B) $17,308 C) $19,121 D) $14,248 E) $16,810

Q: Miller's Hardware has current sales of $42,700, EBIT of $9,700, net income of $6,600, interest expense of $1,360, and dividends paid of $1,925. Assume the profit margin, debt-equity ratio, and dividend payout ratio are held constant. Sales are expected to increase by $8,000 next year. What is the projected change to retained earnings for next year? A) $5,575 B) $4,994 C) $4,909 D) $5,551 E) $5,386