The internal rate of growth is based on the assumption that:
A)the dividend amount is held constant.
B)no external funding of any type is obtained.
C)the return on equity is held constant.
D)the only additional outside capital obtained is long-term debt.
E)the debt-equity ratio is held constant.

Question

Quizplus · Accepted Answer

The internal rate of growth assumes that no external funding of any type is obtained, meaning that the growth of a company is entirely self-funded through reinvesting profits. Therefore, choice B is the correct answer. A, C, D, and E are not accurate assumptions of the internal rate of growth.

The Internal Rate of Growth Is Based on the Assumption