Weight of equity=(100-55)=45%
Dividend payout=Net income-(Weight of equity*Capital budget)
=9000-(0.45*15000)
=$2250
Dividend payout ratio=Dividend payout/Net income
=2250/9000
=25%
Bauer Brewing Co. has the following data, dollars in thousands. If it follows the residual dividend...
27. Portland Plastics Inc. has the following data. If it follows the residual dividend policy, what is its forecasted dividend payout ratio? Capital budget Debt Net income (NI) $14,500 408 $12,000 a. 25.368 b. 27.508 c. 30.40% d. 35.208 e. 38.268
Broske Industries has a capital budget of $3,000,000, but it wants to maintain a target capital structure of 40% debt and 60% equity. The company expects to pay a dividend of $900,000. If the company follows a residual dividend policy, what is its forecasted dividend payout ratio? 20.00% 25.00% 30.00% 33.33% 40.00%
Whitman Antique Cars Inc. has the following data, and it follows the residual dividend model. Some Whitman family members would like more dividends, and they also think that the firm's capital budget includes too many projects whose NPVs are close to zero. If Whitman reduced its capital budget to the indicated level, by how much could dividends be increased, holding other things constant? Original capital budget $3,000,000 New capital budget $2,150,000 Net income $3,500,000 % Debt 35%
Hermes Co. has a capital budget of $1,200,000. The company wants to maintain a target capital structure which is 60 percent debt and 40 percent equity. The company forecasts that its net income this year will be $600,000. If the company follows a residual dividend policy, what will be its payout ratio? 40% 20% 100% 60% 80%
The capital budget forecast for the Santano Company is $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 $125,000. If the company follows the residual dividend policy, how much income must it earn, and what will its dividend payout ratio be? Select the correct answer. a. NI = $523,960 Payout = 23.90% b. NI = $524,380 Payout = 23.96% c. NI = $523,540 Payout =...
Whitman Antique Cars Inc. has the following data, and it follows the residual dividend model. Some Whitman family members would like more dividends, and they also think budget includes too many projects whose NPVs are close to zero. If Whitman reduced its capital budget to the indicated level, by how much could dividends be increased holding other things constant? Original capital budget New capital budget Net income %Debt $3,000,000 $1,900,010 $3,500,000 30% O a. $484,100 O b. $493,500 С. $404,200...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Red Bison Petroleum Producers Corporation: Red Bison Petroleum Producers Corporation is expected to generate $140,000,000 in net income over the next year. Red...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Purple Hedgehog Forestry Group: Purple Hedgehog Forestry Group is expected to generate $240,000,000 in net income over the next year. Purple Hedgehog Forestry...
Grandin Inc. is evaluating its dividend policy. It has a capital budget of $625,000, and it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts a net income of $475,000. If it follows the residual dividend policy, what is its forecasted dividend payout ratio?
Silvana Inc. projects the following data for the coming year. If the firm follows the residual dividend policy and also maintains its target capital structure, what will its payout ratio be? $525,000 40% EBIT $2,000,000 Capital budget Interest rate 10% % Debt Debt outstanding $5,000,000 % Equity Shares outstanding 5,000,000 Tax rate Select the correct answer. 60% 40% O a. 62.15% b. 65.00% O c. 65.95% d. 64.05% e. 63.10%