question 56

A company has a target capital structure that is 25% debt and 75% equity. The capital budget for next year will be $5.0 million. If they report net income for next year of $5.0 million and follow a residual dividend policy, what will its dividend payout percentage be?

Select one:

60%

50%

40%

25%

Question 57

A firm has net income of $2.0 million and it has 1.0 million shares of common stock outstanding. The shares currently trade for $16 a share. The firm is planning to repurchase 15% of the shares. Assuming that the repurchase will have no effect on either net income or the firm's P/E ratio, what will be its share price following the repurchase?

Select one:

$16.00

$32.00

$37.65

$18.82