Roy's Welding Has Annual Sales of $96,700, a Profit Margin

Roy's Welding has annual sales of $96,700, a profit margin of 7.45 percent, and a payout ratio of 40 percent. The firm has $11,500 of debt and owners' equity of $31,200. What is the internal growth rate for this firm assuming the payout ratio remains constant?

A) 9.70 percent
B) 13.87 percent
C) 7.31 percent
D) 7.49 percent
E) 11.26 percent