What Is the Maximum Internal Growth Rate Consistent with Not

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% Internal growth rate = retained earnings/assets
= ($500,000 x .06) /$10 million
= $300,000/10 million