Question
Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend model and also maintains its target capital structure,
Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend model and also maintains its target capital structure, what will its dividend payout ratio be?
| EBIT | $2,600,000 | Capital budget | $1,325,000 | |
| Interest rate | 10% | % Debt | 40% | |
| Debt outstanding | $4,900,000 | % Equity | 60% | |
| Shares outstanding | 5,000,000 | Tax rate | 25% |
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International Financial Management
Authors: Geert Bekaert, Robert J. Hodrick
2nd edition
013299755X, 132162768, 9780132997553, 978-0132162760
