Calculating Internal Growth [LO3] The most recent financial statements for Live Co. are shown here:
Income Statement |
| Balance Sheet |
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Sales | $ 13,250 | Current assets | $ 10,400 | Debt | $17,500 |
Costs | 9,480 | Fixed assets | 28,750 | Equity | 21,650 |
Taxable income | $ 3,770 | Total | $ 39,150 | Total | $ 39,150 |
Taxes (40%) | 11508 |
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Net income | $ 2,262 |
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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. What is the internal growth rate?
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