Torrence Inc. has the following data. If it uses the residual dividend model, how much total dividends, if any, will it pay out?

Capital budget $1,175,000

% Debt 60%

Net income (NI) $890,000

B. Paul Inc. forecasts a capital budget of $750,000. The CFO wants to maintain a target capital structure of 45% debt and 55% equity, and she also wants to pay a dividend of $675,000. If the company follows the residual dividend model, how much income must it earn, and what will its dividend payout ratio be?

C.Discuss the importance of dividend payout and retained earnings to a company along with a real example