Blue Co. already determined the additional financing needed that it plans to raise through issuance of shares amounting to P2,450,000. The profit of the firm is P1,800,000 and it has a policy of retaining two-third of its net income. How much is the projected capital budget of Blue Co.?
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Blue Co. already determined the additional financing needed that it plans to raise through issuance of shares amounting to P2,450,000. The profit of the firm is P1,800,000 and it has a policy of retaining two-third of its net income. How much is the projected capital budget of Blue Co.?
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- Assume that B Corp. net income for next year would be 500 million and its optimal capital budget for next year is 250 million. Also assume that the debt ratio is now 80%. What would be the maximum capital spending if B Corp decides to retain all of its earnings? A) $250 m B) $2,500m C) $4,500 m D) $450 E) $5.500 m OA OB OC OD OEMortal Inc. expects to have a capital budget of $575,000 next year. The company wants to maintain a target capital structure with 35% debt and 65% equity, and its forecasted net income is $500,000. If the company follows the residual dividend model, how much in dividends, if any, will it pay? a. $111,100 b. $126,250 c. $132,563 d. $118,675 e. $113,625 Portland Plastics Inc. has the following data. If it follows the residual dividend model, what is its forecasted dividend payout ratio? Capital budget $13,500 % Debt 40% Net income (NI) $13,650 a. 42.29% b. 44.73% c. 49.20% d. 40.66% e. 32.53%Blue Co. uses Additional Funds Needed as a plug item. It has a new capital budget of P1,450,000, a profit of P705,000 and a dividend payout of 25%. Assuming that any additional financing need will be funded by issuance of long-term bonds, how much bonds must be raised?
- Harvey's Industrial Plumbing Supply's target capital structure consists of 40% debt and 60% equity. Its capital budget this year is forecast to be $650,000. It also wants to pay a dividend of $225,000. a. If the company follows the residual dividend policy, how much net income must it earn to meet its capital requirements, pay the dividend, and keep the capital structure in balance? b. Is the residual approach to setting the dividend a good approach? Why or why not?Harvey's Industrial Plumbing Supply's target capital structure consists of 40% debt and 60% equity. Its capital budget this year is forecast to be $650,000. It also wants to pay a dividend of $375,000. If the company follows the residual dividend policy, how much net income must it earn to meet its capital requirements, pay the dividend, and keep the capital structure in balance? Select the correct answer. O a. $761,320 O b. $766,840 O c. $768,680 O d. $765,000 O e. $763,160A company will be financing its operations with a capital budget of P40,000,000 and a debt-to-equity ratio of 1. The interest rate on the company's debt is 10%. The expected return on equity by the shareholders is 16.66% while the budgeted net income by management is P6,000,000. Assuming that the company's tax rate is 40%, compute the weighted average cost of capital.
- McCann Publishing has a target capital structure of 35% debt and 65% equity. This year's capital budget is $850,000 and it wants to pay a dividend of $450,000. If the company follows a residual dividend policy, how much net income must it earn to meet its capital budgeting requirements and pay the dividend, all while keeping its capital structure in balance? Select the correct answer. a $1,000,000 b. $1,001,250 Oc$1,003,750 O d. $1,002,500 0 e. $998,750Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million. Its optimal capital structure is 60 percent equity and 40 percent debt. Its earnings before interest and taxes (EBIT) are projected to be $34.667 million for the year. The company has $200 million of assets; its average interest rate on outstanding debt is 10 percent; and its tax rate is 40 percent. Required: If the company follows the residual dividend policy and maintains the same capital structure, what will its dividend payout (in $) and the dividend payout ratio (in %)?XYZ Corp has a capital budget of $10M for next year. The company has a target capital structure of 65% Equity / 35% Debt. If net income next year is projected to be $9M and the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio?
- A firm expects to have net income of $5,000,000 during the next year. The company’s target capital structure is 60% debt and 40% equity. The company's director of capital budgeting has determined that the optimal capital budget for the coming year is $5,000,000. If MSL Tech 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 expected dividend payments? $2,000,000 $3,000,000 $5,000,000 $6,000,000 Using the data from Question 31, find the dividend payout ratio for the company. 20% 40% 60% 50%SMPH has a strict residual dividend policy and they projected that the net result of their operation this year is positive at P12,000,000. SMPH has a target capital budget of P10,000,000 and a funding structure of 30% debt and 70% equity.How much of the net income will be used to fund the equity portion of the capital budget?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 $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 IncomePayout a. $ 943,68858.41% b. $1,092,43667.62% c. $ 990,87261.34% d. $ 898,75055.63% e. $1,040,41564.40%