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Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend policy and also maintains its target capital structure,
Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend policy and also maintains its target capital structure, what will its payout ratio be?
EBIT $4,000,000
INTEREST RATE 10%
DEBT OUTSTANDING $10,000,000
SHARES OUTSTANDING $10,000,000
CAPITAL BUDGET $1,700,000
%DEBT 40%
%EQUITY 60%
TAX RATE 40%
A) 39.88 B) 43.33% C)1 7.45% D) 56.67%
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