Author Question: Project LMK requires an initial outlay of 500,000 and has a profitability index of 1.4. The project ... (Read 109 times)

ETearle · **on:** Jul 10, 2018

Project LMK requires an initial outlay of 500,000 and has a profitability index of 1.4. The project is
expected to generate equal annual cash flows over the next ten years. The required return for this
project is 16.

What is project LMK's internal rate of return?
A) 24.78 B) 22.69 C) 19.88 D) 26.12

Question 2

Southland Tours has net income of 2 million this year. The book value of Southland Tours
common equity is 8 million dollars. The company's dividend payout ratio is 60 and is expected
to remain this way.

What is Southland Tours' internal growth rate?
A) 15 B) 10 C) 6 D) 9