INTERNAL GROWTH RATE SALES 15,000 COSTS 6000 NET INCOME 9000 BALANCE SHEET ASSETS 100,000 DEBT 20,000 EQUITY 80,000 TOTAL ASSETS 100,000 TOTAL D + E 100,000 ASSUME THAT LAST YEAT TOTAL ASSETS = 95,000 ASSUME DIVIDEND PAID OUT = $2700 SUSTAINABLE GROWTH RATE: EXAMPLE: INCOME STATEMENT SALES 15,000 COSTS 6000 NET INCOME 9000 BALANCE SHEET ASSETS 100,000 DEBT 20,000 EQUITY 80,000 TOTAL ASSETS 100,000 TOTAL D + E 100,000 ADDITIONAL INFORMATION: DIVIDENDS PAID = $2700 AND THE COMPANY WANTS TO MAINTAIN A CONSTANT PAY OUT RATIO. QUESTION: WHAT GROWTH RATE CAN THE COMPANY ACHIEVE WHILE MAINTAINING THE DEBT-TO-EQUITY RATIO I.E. $20,000/$80,000 = 25% WITH OUT ISSUING ANY NEW EXTERNAL EQUITY