Problempetersen company has a capital budget of 11 million, Ask an Expert

Accounting

Problem:

Petersen Company has a capital budget of $1.1 million. The company wants to maintain a target capital structure which is 60% debt and 40% equity. The company forecasts that its net income this year will be $700,000.

Required:

Question: If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio?

Note: Show all workings.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167801

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