Broske Industries has a capital budget of $3,000,000, but it wants to maintain a target capital structure of 40% debt and 60% equity. The company expects to pay a dividend of $900,000. If the company follows a residual dividend policy, what is its forecasted dividend payout ratio? a. 20.00% b. 25.00% c. 30.00% d. 33.33% e. 40.00%

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter15: Distributions To Shareholders: Dividends And Repurchases
Section: Chapter Questions
Problem 3MC: Assume that IWT has completed its IPO and has a $112.5 million capital budget planned for the coming...
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Broske industries... Financial accounting

Broske Industries has a capital budget of $3,000,000, but it wants to
maintain a target capital structure of 40% debt and 60% equity. The
company expects to pay a dividend of $900,000. If the company
follows a residual dividend policy, what is its forecasted dividend
payout ratio?
a. 20.00%
b. 25.00%
c. 30.00%
d. 33.33%
e. 40.00%
Transcribed Image Text:Broske Industries has a capital budget of $3,000,000, but it wants to maintain a target capital structure of 40% debt and 60% equity. The company expects to pay a dividend of $900,000. If the company follows a residual dividend policy, what is its forecasted dividend payout ratio? a. 20.00% b. 25.00% c. 30.00% d. 33.33% e. 40.00%
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