Assets and costs are proportional to sales. Debt and equity are not. Barely Heroes maintains a…

Calculating Internal Growth

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

Income Statement

Balance Sheet

Sales

$6,475

Current assets

$ 9,000

Debt

$22,000

Costs

3,981

Fixed assets

25,000

Equity

12,000

Taxable income

$2,494

Total

$34,000

Total

$34,000

Taxes (34%)

848

Net income

$1,646

Assets and costs are proportional to sales. Debt and equity are not. Barely Heroes maintains a constant 20 percent dividend payout ratio. No external equity financing is possible. What is the internal growth rate?

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