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Altamonte Telecommunications has a target capital structure that consists of 50% debt and 50% equity. The...

Altamonte Telecommunications has a target capital structure that consists of 50% debt and 50% equity. The company anticipates that its capital budget for the upcoming year will be $3,000,000. If Altamonte reports net income of $1,600,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio? Round your answer to two decimal places.

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Answer #1

rate positively..

Given that -
i Net income =        1,600,000
ii Capital budgeting requirement=        3,000,000
iii Share of equity @ 50%        1,500,000
iv=i-iii dividend as per residual policy =            100,000
v=iv/i Dividend payout ratio = 6.25%
ans = 6.25%
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