Multiple Choice
What is the maximum internal growth rate consistent with not requiring external funding for a firm reporting net income of $500,000, a dividend payout ratio of 40%, and total assets of $10 million?
A) 2%
B) 3%
C) 5%
D) 6% Internal growth rate = retained earnings/assets
= ($500,000 x .06) /$10 million
= $300,000/10 million
Correct Answer:
Verified
Correct Answer:
Verified
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