A company is evaluating five different projects which has same initial cost but different returns. The initial cost of each project is $200,000. The company maintains debt-equity ratio of 70%. Cost of capital is 10%. The dividend policy followed by the company is residual dividend policy. IRR of project A is 15% IRR of project B is 8% IRR of project C is 14% IRR of project D is 9% IRR of project E is 11% Company earned the net income of $800,000 for the year. What is the dividend pay-out ratio? 77.50% 30.00% 55.88% 70.00%
A company is evaluating five different projects which has same initial cost but different returns. The initial cost of each project is $200,000. The company maintains debt-equity ratio of 70%. Cost of capital is 10%. The dividend policy followed by the company is residual dividend policy. IRR of project A is 15% IRR of project B is 8% IRR of project C is 14% IRR of project D is 9% IRR of project E is 11% Company earned the net income of $800,000 for the year. What is the dividend pay-out ratio? 77.50% 30.00% 55.88% 70.00%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:A company is evaluating five different projects which has same initial cost but different returns. The initial cost of each project is $200,000. The company maintains debt-equity ratio of 70%. Cost of capital is 10%. The dividend policy followed by the
company is residual dividend policy.
IRR of project A is 15%
IRR of project B is 8%
IRR of project C is 14%
IRR of project D is 9%
IRR of project E is 11%
Company earned the net income of $800,000 for the year. What is the dividend pay-out ratio?
77.50%
O 30.00%
55.88%
70.00%
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