What will be the payout ratio? XYZ Corp. has a capital budget of $2.5 million. The firm's targetcapital structure consists of 70% debt. The company isforecasting a net income of $1,000,000 for the year.Following the residual distribution model and paying alldistributions as dividends, what will be the payout ratio?A. 5%B. 10%C. 15%D. 25%

Step 1: Calculate the equity portion of the capital budgetThe firm's target capital structure…

Answered: XYZ Corp. has a capital budget of $2.5…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 6P

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