A firm expects to have a net income of $8,000,000 during the next year. Its target capital structure is 50% debt and 50% equity. The company has determined that the optimal capital budget for the coming year is $6,000,000. If the firm follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming year's dividend, then what is the firm's dividend payout ratio? O 28.5% O 40.0% O 50.5% O 62.5%

A firm expects to have a net income of $8,000,000 during the next year. Its target capital structure is 50% debt and 50% equity. The company has determined that the optimal capital budget for the coming year is $6,000,000. If the firm follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming year's dividend, then what is the firm's dividend payout ratio? O 28.5% O 40.0% O 50.5% O 62.5%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter15: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 3MC: Assume that IWT has completed its IPO and has a $112.5 million capital budget planned for the coming...

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