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3. External Financing and Growth (40 points) a) A firm has net income of $6000 and total assets of $30,000. The dividend payout ratio is

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3. External Financing and Growth (40 points) a) A firm has net income of $6000 and total assets of $30,000. The dividend payout ratio is 40%. What is the internal growth rate? b) A firm has a net income of $2000 pays $400 in dividends. Its total equity is $8000. What is the sustainable growth rate? ROA x b Internal Growth Rate 1 - ROA x b ROE xb Sustainable Growth Rate 1- ROE xb

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