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Paul Inc. forecasts a capital budget of $725,000. The CFO wants to maintain a target capital structure of 45% debt and 55% equity, and it also wants to pay dividends of $500,000. If the company follows the residual dividend policy, how much income must it earn, and what will its dividend payout ratio be?

Net Income Payout

(a) $898,750 55.63%

(b) $943,688 58.41%

(c) $990,872 61.43%

(d) $1,040,415 64.40%

(e) $1,092,436 67.62%

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M947393

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