Answer Happy

Given the information in the table on KMS did KMS's expansion plan call for it to grow slower or faster than its sustainable growth rate? The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.
2019 2020 2021 2022 2023 2024 Income Statement (000) Sales Cost of Goods Sold EBITDA Depreciation EBIT Interest Expense Pre-tax Income Taxes Net Income $74,889 58,413 $16,476 5,492 $10,984 306 $10,678 2,670 $8,008 $88,369 68,928 $19,441 7,443 $11,998 306 $11,692 2,923 $8,769 $103,247 80,533 $22,714 7,498 $15,216 1,666 $13,550 3,388 $10,162 $119,793 93,439 $26,354 7,549 $18,805 1,666 $17,139 4,285 $12,854 $138,167 107,770 $30,397 7,594 $22,803 1,666 $21,137 5,284 $15,853 $ 158,546 123,666 $34,880 7,634 $27,246 1,666 $25,580 6,395 $19,185 Payout Ratio Additions to shareholder equity Beginning shareholder equity 30% $5,606 $6,138 74,134 $7,113 80,272 $8,998 87,385 $11,097 96,383 $13,430 107,480
The actual growth rate for 2020 is %. (Round to two decimal places.) The actual growth rate for 2021 is %. (Round to two decimal places.) The actual growth rate for 2022 is %. (Round to two decimal places.) The actual growth rate for 2023 is %. (Round to two decimal places.) The actual growth rate for 2024 is %. (Round to two decimal places.) The sustainable growth rate for 2020 is %. (Round to two decimal places.) The sustainable growth rate for 2021 is (%. (Round to two decimal places.) The sustainable growth rate for 2022 is %. (Round to two decimal places.) The sustainable growth rate for 2023 is %. (Round to two decimal places.) The sustainable growth rate for 2024 is %. (Round to two decimal places.) KMS's expansion calls for it to grow than its sustainable growth rate. (Select from the drop-down menu.)
The table below gives a detailed forecast of the size of the market by production volume. Assume that KMS expects to capture 10.10% of the market share in 2019 and expects that percentage will increase by 0.23% per year. KMS currently has the capacity to produce a maximum of 1,100,000 units. What production capacity will KMS require each year? When will an expansion become necessary (that is, when will production volume exceed 1,100,000 units)? 2019 2020 2021 2022 2023 2024 Year Production Volume (000 units) Market Size 10,000 10,490 11,075 11,523 12,120 12,724 The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.
KMS's market share for 2019 is units. (Round to the nearest integer.) KMS's market share for 2020 is units. (Round to the nearest integer.) KMS's market share for 2021 is units. (Round to the nearest integer.) KMS's market share for 2022 is units. (Round to the nearest integer.) KMS's market share for 2023 is units. (Round to the nearest integer.) KMS's market share for 2024 is units. (Round to the nearest integer.) When will an expansion become necessary (that is, when will production volume exceed 1,100,000 units)? (Select the best choice below.) A. In 2021, production will exceed 1,100,000 units and production capacity will have to be increased. B. In 2020, production will exceed 1,100,000 units and production capacity will have to be increased. C. In 2022, production will exceed 1,100,000 units and production capacity will have to be increased. OD. In 2019, production will exceed 1,100,000 units and production capacity will have to be increased.