Open Door Manufacturer earned $100,000 this year. The company follows the residual dividend policy when paying dividends.

Question:

Open Door Manufacturer earned $100,000 this year. The company follows the residual policy when paying dividends. Open Door has determined that it needs a total of $120,000 for investment in projects this year. If the company’s debt-to-asset ratio is 50 percent, what will its payout ratio be this year?

Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...