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
Answer: b. $ 800,000
Amount required for capital budget= $6.00
70% 0f ...
Calculates the amount of dividends.