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%
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