PROBLEM $13-5$

RESIDUAL DIVIDEND POLICY

DATA

Capital Expenditure Funding $40\%$

Debt $60\%$

Estimated Earnings $12,000,000$

A$)$

Capital Expenditure Financing $=0$

B$)$

Capital budget $=10,000,000$

Retained Earnings $4,000,000$

Cash Dividends $($residual$)8,000,000$

Dividend Payout Percentage $=0\%$