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You Have Been Given the Attached Information on the Crum

question 17

Multiple Choice

You have been given the attached information on the Crum Company. Crum expects sales to grow by 50 percent in the next year and operating costs should increase in proportion to sales. Fixed assets were being operated at 40 percent of capacity in the most recent year, but all other assets were used to full capacity. Underutilized fixed assets cannot be sold. Current assets and spontaneous liabilities should increase in proportion to sales during the next year. The company plans to finance any external funds needed as 35 percent notes payable and 65 percent common stock. The interest rate is 8 percent; base interest expense on the debt at the beginning of the year (cash earns no interest income) . The dividend payout ratio will remain constant, irrespective of how many shares of stock are outstanding. What is Crum's projected ROE using the percentage of sales method? (Ignore any financing feedback effects.)

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Stress

Stress is the body's response to any demand or challenge, which can be physical, mental, or emotional, ranging from beneficial to detrimental effects.

Cancer

A broad group of diseases characterized by the uncontrolled growth and spread of abnormal cells.

Vulnerable

Describes a state of being open to harm, damage, or emotional hurt, either physically or emotionally, due to various conditions or circumstances.

Posttraumatic Stress Disorder

A psychiatric disorder that may occur in people who have experienced or witnessed a traumatic event, characterized by severe anxiety, flashbacks, and uncontrollable thoughts about the event.