Please help with the following questions
Plato Inc. expects net income of $5,000,000 next year. Plato's target capital structure is 35% debt and 65% equity. Management estimates that the optimal capital budget for the coming year is $6,000,000. If Plato follows a residual dividend policy, what is its payout ratio?
Simon Utility expects net income of $5 billion this year. The company has an estimated capital budget of $4 billion, and its capital structure is 65% common equity and 35% debt. If the company follows a strict residual dividend policy, what is the company?s expected dividend payout ratio?
a 2.5 percent.
b 2.0 percent.
c 4.0 percent.
d 40 percent.
1. In residual policy, first all equity needs are met and the remaining amount is paid as dividend. The capital budget is $6,000,000 ...
The solution explains some multiple choice questions relating to dividends