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Consider the following information: Capital budget: $800,000. Target capital structure: 40% debt, 60% equity. Forecasted net income: $600,000. If all distributions are in the form
Consider the following information: Capital budget: $800,000. Target capital structure: 40% debt, 60% equity. Forecasted net income: $600,000.
If all distributions are in the form of dividends, how much of the $600,000 should we pay out as dividends? What will be the payout ratio?
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