#33 P4-6 Calculating Internal Growth [LO3]

The most recent financial statements for Live Co. are shown here:

Income Statement		Balance Sheet
Sales	$4,700	Current assets	$4,996	Debt	$9,988
Costs	3,102	Fixed assets	12,230	Equity	7,238
Taxable income	$1,598	Total	$17,226	Total	$17,226
Taxes (34%)	543
Net income	$1,055

Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 32 percent dividend payout ratio. No external equity financing is possible.

Required:

What is the internal growth rate? (Do not round your intermediate calculations.)

a) 4.24%

b) 4.34%

c) 2%

d) 11%

e) 4.44%