What Is the Maximum Internal Growth Rate Consistent with Not

question 51

Multiple Choice

What is the maximum internal growth rate consistent with not requiring external funding for a firm reporting net income of $500,000,a dividend payout ratio of 40%,and total assets of $10 million?

• A) 2%
• B) 3%
• C) 5%
• D) 6%

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Definitions:

Federal Government

The national government of a federal republic, which possesses certain powers at the national level while other powers are shared with or reserved for the states.

Interest Rates

The percentage charged on a loan or paid on savings, effectively the price of capital.

Microeconomics

The study of economic behavior and decision-making by individuals and firms, focusing on the mechanisms that govern the allocation of resources.

Individual Consumers

Individuals who purchase goods and services for personal use from the market.