How can I calculate this?

Imagine that Gill Bates works with the following planning data for setting up a new venture:

 

Sales/Assets = 1.5, (1,5)

Interest rate r = 0.05,

EBIT/Sales = 0.1,

Tax rate t = 0.3,

Retention rate R = 0.7,

 

Initial Equity = 500 000 $,

 

No further equity investment possible,

 

Actual sales forecast for period 6: 1,487,812.57$.

 

Consider the following statements about the intended venture and

 

Decide whether the statements are true or false. Explain your Answer!

 

1. A sustainable growth rate, given the forecast of actual sales is correct, would require debt financing of 180 000$.

(75000-0.05(180000-500000))(1-0.3)/750000*1.5*0.36 (leverage ratio)*0.7 = 32.10%

 

750000*(1+0.03210)^5 = 878355

 

1,487,813 – 878,355 = 609458

 

1. The sustainable growth rate with debt adjustment is then 8.82 percent.

 

2. Imagine, that sales forecast would turn into reality. Then the leverage could be reduced if the retention rate R would be increased.

 

Thanks!