Question
A firm has the following figures for 2018 and 2019: Year 2018 2019 Net Income $360,000 $420,000 Shares outstanding 150,000 180,000 Growth rate (g) 8%
A firm has the following figures for 2018 and 2019: Year 2018 2019 Net Income $360,000 $420,000 Shares outstanding 150,000 180,000 Growth rate (g) 8% 8% Capital Budget $500,000 $600,000 Debt ratio 60% 50%
1- Under the residual dividend policy, how much is total dividend for 2018? *
$160,000
$180,000
$200,000
$220,000
None of the above
2- Under the residual dividend policy, how much is the companys dividends per share for 2018? *
$1.54
$2.12
$1.93
$1.07
None of the above
3- Under the residual dividend policy, how much is companys dividend payout ratio for 2018? *
52%
44.44%
62.33%
25.26%
None of the above
4- Under the residual dividend policy, how much is companys dividend payout ratio for 2019? *
32%
18.18%
28.57%
45.37%
None of the above
5- Under the residual dividend policy, how much is maximum capital could be invested in 2019 if the companys payout ratio is 40%? *
$840,000
$504,000
$367,400
$332,660
None of the above
6- If the company wants a capital for $875,000 to start a new project in 2019, based on the same debt ratio and Net Income, how much could be the external equity needed if the company pays out only 15% dividend? *
$87,300
$80,500
$63,000
No external equity needed
None of the above
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