Question
Anderson Enterprises expects Net Income during its next fiscal year to be $15 million. The firm currently has a capital structure that consists of 30%
Anderson Enterprises expects Net Income during its next fiscal year to be $15 million. The firm currently has a capital structure that consists of 30% debt financing. Anderson Enterprises Board of Directors is currently considering investments in $12 million of profitable capital budgeting projects during the coming fiscal year. The firms Board of Directors also wishes to maintain the firms existing capital structure. According to the residual dividend model, what amount of funds will Anderson Enterprises have available for dividend payments to shareholders during the coming year, assuming the firms available capital investment projects are funded, also?
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