Intermediate Financial Management
Intermediate Financial Management
14th Edition
ISBN: 9780357516782
Author: Brigham, Eugene F., Daves, Phillip R.
Publisher: Cengage Learning
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Chapter 15, Problem 2P
Summary Introduction

To determine: Pay-out ratio of Company P.

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Course: Costs and Budgeting - Equilibrium Point ABC has generated an investment of $500,000 with its shareholders and wishes to achieve a pre-tax return of 30% for this period. Its variable costs are $30 per unit, selling price is $80 per unit and fixed costs are $50,000. How much does the company have to sell to reach the profit projected by the shareholders?
Fena Company has a capital budget of P1.2 million. The company wants to  maintain a target capital structure that is 60% debt and 40% equity. The company forecasts that its net income this year will be P600,000. If the company follows a  residual distribution model and pays all distributions as dividends, what will be its payout ratio?
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?
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