United Builders wants to maintain a target capital structure with 30% debt and 70% equity. Its forecasted net income is $600,000, and because of market conditions, the company will not issue any new stock during the coming year. If the firm follows the residual dividend policy, what is the maximum capital budget that is consistent with maintaining the target capital structure? Select the correct answer. a. $856,402 b. $857,143 c. $856,896 d. $856,649 e. $857,390
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
United Builders wants to maintain a target capital structure with 30% debt and 70% equity. Its
Select the correct answer.
a. $856,402
b. $857,143
c. $856,896
d. $856,649
e. $857,390
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