The most recent financial statements for Live Co. are shown here:
|
Income Statement
|
Balance Sheet
|
|
Sales
|
$13,250
|
Current assets
|
$10,400
|
Debt
|
$51,000
|
|
Costs
|
9,480
|
Fixed assets
|
28,750
|
Equity
|
21,650
|
|
Taxable income
|
$3,770
|
Total
|
$39,150
|
Total
|
$39,150
|
|
Taxes (34%)
|
1,508
|
|
|
|
|
|
Net income
|
$2,262
|
|
|
|
|
Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible.
Required:
What is the internal growth rate?
- 4.11%
- 7.89%
- 1.76%
- 4.21%
- 4.31%