Explore BrainMass

Explore BrainMass

    Saturn target capital structure, residual dividend policy

    Not what you're looking for? Search our solutions OR ask your own Custom question.

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

    Saturn Inc. expects to have net income of $20,000,000 during the next year. Saturn's target capital structure is 35 percent debt and 65 percent equity. The company's director of capital budgeting has has determined that the optimal capital budget for the coming year is $24,000,000. If Saturn follows a residual dividend policy to determine the coming year's dividend, then what is Saturn's payout ratio? Show calculations.

    © BrainMass Inc. brainmass.com March 4, 2021, 10:06 pm ad1c9bdddf
    https://brainmass.com/business/dividends-stock-repurchase-and-policy/saturn-target-capital-structure-residual-dividend-policy-299967

    Solution Preview

    Capital Budget = $24 million
    Portion of capital budget to funded using ...

    Solution Summary

    This solution demonstrates how to calculate the dividend payout ratio under the residual dividend policy.

    $2.49

    ADVERTISEMENT