Expected Payout Ratio
Not what you're looking for?
General Electric's expected net income for next year is 1,000,000. The company's target and current capital structure is 40 percent debt and 60 percent common equity. The optimal capital budget for next year is 1.2 million. If John uses the residual theory of dividends to determine next year's dividend payout, what is the expected payout ratio?
(a). 56 percent
(b). 42 percent
(c). 28 percent
(d). 10 percent
(e). 0 percent
Please include a step-by-step calculation for finding the expected payout ratio of General Electric, using the provided values for net income, target and current capital structure, and optimal capital budget for the next year.
Purchase this Solution
Solution Summary
This solution provides a step-by-step process for calculating the expected payout ratio of General Electric using the residual theory of dividends, given their net income, target and current capital structure, and optimal capital budget for the next year.
Solution Preview
Dividend payout ratio = Dividend/Net Income
Dividend = Net Income - Retained ...
Purchase this Solution
Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.