Explore BrainMass

Explore BrainMass

    Residual dividends: payout policy

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Company A has a target capital structure that consists of 70 percent debt and 30 percent equity. The company anticipates that its capital budget for the upcoming year will be 3,000,000. If Company A reports net income of 2,000,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio? Please show calculations.

    © BrainMass Inc. brainmass.com October 9, 2019, 9:46 pm ad1c9bdddf

    Solution Preview

    In a residual dividend policy, we subtract the retained earnings required for investment from the net income and the remaining amount is paid as ...

    Solution Summary

    The solution explains how to calculate the dividend payout under a residual dividend policy