Question
Components Manufacturing Corporation CMC has 1 million shares of stock outstanding CMC has a target capital structure with 60 equity and 40 debt The company
Components Manufacturing Corporation CMC has 1 million shares of stock outstanding CMC has a target capital structure with 60 equity and 40 debt The company projects net income of 5 million and investment projects requiring 6 million in the upcoming year.
a. CMC uses the residual distribution model and pays all distributions in the form of dividends. What is the projected DPS?
b. What is the projected payout ratio?
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a In Residual Income Method the net income will be distributed against the Equity portion of capita...
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Corporate Finance
Authors: Jonathan Berk and Peter DeMarzo
3rd edition
978-0132992473, 132992477, 978-0133097894
