Assume that you were recently hired by Pierce Westerfield Carney $($PWC$),$ a national consulting firm, which has been asked to help SSC prepare for its public offering, Martha Millon, the senior PWC Consultant in your group, has asked you to make a presentation to Brown and Lapointe in which you review the theory of dividend policy.

Question:

Assume that CCS has an $$800,000$ capital budget planned for the coming year. You have determined that its present capital structure $(60$ percent equity and $40$ percent debt$)$ is optimal, and its net income is forecasted at $$600,000.$ Use the residual distribution model approach and determine CCS$\text{'}$s total dollar distribution. Assume for now that the distribution is in the form of a dividend.

$$140,000$

$$120,000$

$$80,000$

$$100,000$