Metronic has $70M in equity and $30M in debt and forecasts $14M in net income for the year. It currently pays dividends equal to 20% of its net income. You are analyzing a potential change in payout policy -an increase in dividends to $30% of net income. How would this change affect your internal and sustainable growth rates?

What is the internal growth rate of Metronic under the current payout policy?

Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05