The residual dividend policy approach is based on the theory that a firm's optimal distribution policy is a of the firm's target capital structure, the investment opportunities that the firm has, and the availability and cost external capital. The firm makes distributions based on the residual earnings. Consider the following example: Blime Inc Is expected to generate $140 million in net income over the next year. Blime Inc has forecasted a capital budget of $86 million, and It wishes to maintain Its current capital structure of 70% debt and 30% equity. The residual dividend policy approach is based on the theory that a firm's optimal distribution policy is a of the firm's target capital structure, the investment opportunities that the firm has, and the availability and cost external capital. The firm makes distributions based on the residual earnings. Consider the following example: Blime Inc Is expected to generate $140 million in net income over the next year. Blime Inc has forecasted a capital budget of $86 million, and It wishes to maintain Its current capital structure of 70% debt and 30% equity