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Chicago Brewing has a target capital structure of 45% debt and 55% equity. The capital budget for the upcoming year is $5,700. If the company
Chicago Brewing has a target capital structure of 45% debt and 55% equity. The capital budget for the upcoming year is $5,700. If the company follows the residual dividend model, where it funds capital projects from earnings in alignment with the target capital structure percentages, what percentage of income will be available for dividend payout (e.g. what will its dividend payout ratio be)? Hint: similar to homework 14-1 Capital budget $5,700 % Debt 45% Net income (NI) $3,300 5.00% 22.27% 57.90% O 55.00% O 5.90%
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