A.

Petersen Company has a capital budget of $1.1 million. The company wants to maintain a target capital structure that is 70% debt and 30% equity. The company forecasts that its net income this year will be $400,000. If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio? Round your answer to two decimal places.

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B.

Puckett Products is planning for $2 million in capital expenditures next year. Puckett's target capital structure consists of 65% debt and 35% equity. If net income next year is $1 million and Puckett follows a residual distribution policy with all distributions as dividends, what will be its dividend payout ratio? Round your answer to two decimal places.

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