Petersen Company has a capital budget of $1.0 million. The company wants to maintain a target capital structure that is 60% debt and 40% equity. The company forecasts that its net income this year will be $700,000. If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio? Round your answer to two decimal places.
Petersen Company has a capital budget of $1.0 million. The company wants to maintain a target capital structure that is 60% debt and 40% equity. The company forecasts that its net income this year will be $700,000. If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio? Round your answer to two decimal places.
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
Problem 1PS
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Petersen Company has a capital budget of $1.0 million. The company wants to maintain a target capital structure that is 60% debt and 40% equity. The company forecasts that its net income this year will be $700,000. If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio? Round your answer to two decimal places.
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