In: Finance
Lane Industries is considering three independent projects, each of which requires a $2.5 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented here:
Note that the projects' costs of capital vary because the
projects have different levels of risk. The company's optimal
capital structure calls for 40% debt and 60% common equity, and it
expects to have net income of $3,900,000. If Lane establishes its
dividends from the residual dividend model, what will be its payout
ratio? Round your answer to 2 decimal places. |