Petersen Company has a capital budget of $1.2 million. The company wants to maintain a target capital

Question:

Petersen Company has a capital budget of $1.2 million. The company wants to maintain a target which is 60% debt and 40% equity. The company forecasts that its net income this year will be $600,000. If the company follows a residual model and pays all distributions as dividends, what will be its payout ratio?

Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...