Blue Co. has a capital structure that consists of 25% equity and 75% liabilities. The company expects to report P3,000,000 in net income this year, and 50% of the it will be paid out as dividends to the shareholders. Determine how large must the firm’s capital budget be this year without resorting to issue any new common stock.
Blue Co. has a capital structure that consists of 25% equity and 75% liabilities. The company expects to report P3,000,000 in net income this year, and 50% of the it will be paid out as dividends to the shareholders. Determine how large must the firm’s capital budget be this year without resorting to issue any new common stock.
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 4P
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Blue Co. has a capital structure that consists of 25% equity and 75% liabilities. The company expects to report P3,000,000 in net income this year, and 50% of the it will be paid out as dividends to the shareholders.
Determine how large must the firm’s capital budget be this year without resorting to issue any new common stock.
a. 6,000,000
b. 2,000,000
c. 8,000,000
d. 240,000
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