A firm has $50 million in equity and $20 million of debt, it pays dividends of 30% of net income, and has a net income of $10 million. What is the firm's internal growth rate?

Using the capital asset pricing model, the cost of equity capital for a company in this industry with a debt-to-equity ratio of 0.01, asset beta of 2.27, and a marginal tax rate of 23% is closest to:

Boris Duarte, CFA, covers initial public offerings for Zellweger Analytics, an independent research firm specializing in global small-cap equities. He has been asked to evaluate the upcoming new issue of TagOn, a U.S.-based business intelligence software company. The industry has grown at 26 percent per year for the previous three years. Large companies dominate the market, but sizable “pure-play” companies such as Relevant, Ltd., ABJ, Inc., and Opus Software Pvt. Ltd also compete. Each of these competitors is domiciled in a different country, but they all have shares of stock that trade on the U.S. NASDAQ. The debt ratio of the industry has risen slightly in recent years. Company Sales (in millions) Market Value Equity (in millions) Market Value Debt (in millions) Equity Beta Tax Rate Share Price Relevant Ltd. $752 $3,800 $0.0 1.702 23% $42 ABJ, Inc. $843 $2,150 $6.5 2.800 23% $24 Opus Software Pvt. Ltd. $211 $972 $13.0 3.400 23% $13 Duarte uses the information from the preliminary prospectus for TagOn’s initial offering. The company intends to issue 1 million new shares. In his conversation with the investment bankers for the deal, he concludes the offering price will be between $7 and $12. The current capital structure of TagOn consists of a $2.4 million five-year noncallable bond issue and 1 million common shares. Other information that Duarte has gathered: Currently outstanding bonds $2.4 million five-year bonds, coupon of 12.5 percent, with a market value of $2.156 million Risk-free rate of interest 5.25% Estimated equity risk premium 7% Tax rate 23% A. 17%. B. 21%. C. 24%.

The most appropriate definition of a balance sheet is that it is a statement that shows

A) a balance between one's goals and resources available to achieve them. B) a realistic balance between income and expenses for an upcoming period. C) your wealth (net worth) as of a specific date. D) how to balance your financial books of account.