A firm expects to have net income of $5,000,000 during the next year. The company’s target capital structure is 60% debt and 40% equity. The company's director of capital budgeting has determined that the optimal capital budget for the coming year is $5,000,000. If MSL Tech follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming year’s dividend, then what is the firm’s expected dividend payments? $2,000,000 $3,000,000 $5,000,000 $6,000,000 Using the data from Question 31, find the dividend payout ratio for the company. 20% 40% 60% 50%

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
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A firm expects to have net income of $5,000,000 during the next year.  The company’s target capital structure is 60% debt and 40% equity.  The company's director of capital budgeting has determined that the optimal capital budget for the coming year is $5,000,000.  If MSL Tech follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming year’s dividend, then what is the firm’s expected dividend payments?

$2,000,000                      

$3,000,000                      

$5,000,000                      

$6,000,000

Using the data from Question 31, find the dividend payout ratio for the company.

   

20%

   

40%

   

60%

   

50%

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