Southland Tours has a 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. 6% b. 9% c. 10% d. 15%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 4P
icon
Related questions
Question

Financial accounting

Southland Tours has a 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. 6%
b. 9%
c. 10%
d. 15%
Transcribed Image Text:Southland Tours has a 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. 6% b. 9% c. 10% d. 15%
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage