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Consider the case of Red Bison Petroleum Producers Group: Red Bison Petroleum Producers Group has generated earnings of $180,000,000. Its target capital structure consists of
Consider the case of Red Bison Petroleum Producers Group: Red Bison Petroleum Producers Group has generated earnings of $180,000,000. Its target capital structure consists of 60% equity and 40% debt. It plans to spend $85,000,000 on capital projects over the next year and expects to finance this investment in the same proportion as its capital structure. the company makes distributions in the form of dividends. What will Red Bison Petroleum Producers' dividend payout ratio be if it follows a residual dividend policy? 78.84% 71.67% 53.75% 68.09% Red Bison Petroleum Producers is considering using more equity and less debt in its capital structure. Which of these statements best describes how this will affect the firm's annual dividend, assuming that all other factors are held constant? Red Bison Petroleum Producers will pay a smaller annual dividend if it goes forward with this decision. Red Bison Petroleum Producers' annual dividend will be greater if it goes forward with this decision. Most firms have earnings that vary considerably from year to year and do not grow at a reliably constant pace. Furthermore, their required investment may change often. Which of these statements is the most accurate? A residual dividend policy can't be of any help to most firms. Most firms can still use the concepts behind a residual dividend policy to make long-run decisions about dividends
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