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17,500 The most recent financial statement for Sunset Co., are shown below: Income Statement Balance Sheet Sales 153,250 Current Assets 10,400 Long-term Debt Costs 9,480

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17,500 The most recent financial statement for Sunset Co., are shown below: Income Statement Balance Sheet Sales 153,250 Current Assets 10,400 Long-term Debt Costs 9,480 Fixed Assets 28,750 Equity Taxable income 3,770 Taxes (34%) 1,508 Total 39,150 Total Net Income 2,262 21,650 39,150 a. Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30% dividend payout ratio. No external equity financing is possible. What is the maximum growth rate that can be achieved without the need for external finance (the internal rate of growth)? What is the growth rate which will enable the company to maintain its debt/equity ratio (the sustainable growth rate)? b

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