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Northern Foods has aftertax earnings of $43,200 for the year. The firm adheres to a residual dividend policy and maintains a debt-equity ratio of .6.

Northern Foods has aftertax earnings of $43,200 for the year. The firm adheres to a residual dividend policy and maintains a debt-equity ratio of .6. The firm needs $45,000 for capital investment. How much will the firm pay out in dividends from this year's earnings and why?

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