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Fundamentals of Corporate Finance, 4/c/e

Fundamentals of Corporate Finance, 4/e

Stephen A. Ross, Massachusetts Institute of Technology
Randolph W. Westerfield, University of Southern California
Bradford D. Jordan, University of Kentucky
Gordon S. Roberts, York University

Long-Term Financial Planning and Corporate Growth

S&P Projects

The following questions can be used with Standard & Poor's Educational Version of Market Insight.

Calculating EFN
Find the income statements and balance sheets for Magna International (MGA). Assuming sales grow by 10 percent, what is the EFN for Magna next year? Assume non-operating income/expense and special items will be zero next year. Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. Magna will have the same tax rate next year as it does in the current year.
Internal and Sustainable Growth Rates
Look up the financial statements for Potash Corporation of Saskatchewan Inc. (POT) and Canwest Global Communications (CWG). For each company, calculate the internal growth rate and sustainable growth rate over the past two years. Are the growth rates the same for each company for the two years? Why or why not?

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