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Rocketdyne is planning its cash distribution policy. Company analysts have forecast the following: 75%Target equity ratio for capital structure 120 Capital budget for upcoming investment
Rocketdyne is planning its cash distribution policy.
Company analysts have forecast the following:
75%Target equity ratio for capital structure
120 Capital budget for upcoming investment opportunities
80 Net income forecast
Additional company information:
80 Shares outstanding, millions
Using the residual distribution model,
a.) What is Rocketdyne's planned distribution based on the forecast? (think carefully about this)
b.) What does your answer for a) tell you about the firm's investment opportunities and/or capital structure target?
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