Strategic Systems, Inc., expects net income of $800,000 for next year. Its target capital structure is 40 percent debt and 60 percent common equity. The Director of Capital Budgeting has determined that the optimal capital budget for next year is $1.2 million. If Strategic uses the residual dividend policy to determine next year’s dividend payout, what is the expected payout ratio? 0% 10% 67% 80% 90%

Strategic Systems, Inc., expects net income of $800,000 for next year. Its target capital structure is 40 percent debt and 60 percent common equity. The Director of Capital Budgeting has determined that the optimal capital budget for next year is $1.2 million. If Strategic uses the residual dividend policy to determine next year’s dividend payout, what is the expected payout ratio? 0% 10% 67% 80% 90%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 11P

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