Weston Automotive has a capital budget of $1,500,000 and wants to maintain a target capital structure of 60% debt and 40% equity. The company expects to pay a dividend of $400,000. If the company follows a residual dividend policy, what is its forecasted dividend payout ratio? a. 32.50% b. 35.00% c. 37.50% d. 40.00%

Weston Automotive has a capital budget of $1,500,000 and wants to maintain a target capital structure of 60% debt and 40% equity. The company expects to pay a dividend of $400,000. If the company follows a residual dividend policy, what is its forecasted dividend payout ratio? a. 32.50% b. 35.00% c. 37.50% d. 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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