Question
Merlo, Inc. maintains a debt-equity ratio of 0 .40 and follows a residual dividend policy. The company has after-tax earnings of $1,400 for the year
Merlo, Inc. maintains a debt-equity ratio of 0 .40 and follows a residual dividend policy. The company has after-tax earnings of $1,400 for the year and needs $1,400 for new investments. What is the total amount Merlo will pay out in dividends this year?
| A. | $400 |
| B. | $640 |
| C. | $0 |
| D. | $600 |
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Cases in Finance
Authors: Jim DeMello
3rd edition
1259330476, 1259330478, 9781259352652 , 978-1259330476
