Explore BrainMass
Share

Dividends

Morrison Movers's optimal capital structure calls for financing seventy percent of new assets with equity. Assuming that Morrison Movers has net income of $5 million, how much can be paid out in the form of a dividend and still have sufficient funds to cover a $6 million capital budget?
a. $0, it needs all of the funds for expansion
b. $ 800,000
c. $4,200,000
d. $5,000,000

© BrainMass Inc. brainmass.com June 23, 2018, 1:50 pm ad1c9bdddf

Solution Preview

Answer: b. $ 800,000

Amount required for capital budget= $6.00
70% 0f ...

Solution Summary

Calculates the amount of dividends.

$2.19