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8. Starbucks is considering how to set its dividend policy. It has a capital budget of $3,000,000. The company wants to maintain a target capital
8. Starbucks is considering how to set its dividend policy. It has a capital budget of $3,000,000. The company wants to maintain a target capital structure that is 15% debt and 85% equity. a. The company forecasts that its net income this year will be $3,500,000. If the company follows a residual dividend policy, what will be its total dividend payment and payout ratio? b. Suppose the firm earns $1 million less than expected this year (ie net income equals $2,500,000), how much would the dividend payment and payout ratio be in this case
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