Explore BrainMass

Explore BrainMass

    Axel Telecommunications has a target capital structure that consists of 70 percent debt and 30 percent equity.

    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!

    Axel Telecommunications 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 Axel reports net income of $2,000,000 and it follows a residual distribution model with all distributions as dividends, what will be its dividend payout ratio?

    © BrainMass Inc. brainmass.com March 4, 2021, 6:06 pm ad1c9bdddf
    https://brainmass.com/business/finance/29542

    Solution Preview

    Capital budget = $3,000,000.

    Increase in equity = 30% * capital budget ...

    Solution Summary

    This solution provides a brief, easy to understand calculation of dividend payout ratio using the dividend payout and net income information.

    $2.49

    ADVERTISEMENT