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%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
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Chapter16: Working Capital Policy And Short-term Financing
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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%
Transcribed Image Text: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%
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