Need help with this question solution financial Accounting JS has a capital budget of $1.2 million. The firm s target capitalstructure is 60% debt. The company is forecasting a net income thisyear of $600,000. Following the residual distribution model and payingall distributions as dividends, the payout ratio will be:A. 10%B. 12%C. -20%D. 20%

Step 1: Residual Distribution ModelThe residual distribution model refers to the distribution of…

Answered: JS has a capital budget of $1.2…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

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Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 11P

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JS has a capital budget of $1.2 million. The firm s target capital structure is 60% debt. The company is forecasting a net income this year of $600,000. Following the residual distribution model and paying all distributions as dividends, the payout ratio will be: A. 10% B. 12% C. -20% D. 20%