Company follows residual dividend policy

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Reference no: EM131813141

1. Terrell Corp. has a capital budget of $6,000,000. The company's target capital structure is 45% debt and 55% equity. Its forecasted net income is $4,000,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out?

A. $0 $700,000

B. $1,300,000

C. $2,000,000

D. None of the above

2. Jordan Imports' recent IPO had terms of 20 million shares, offer price $10 per share, proceeds to the company $180 million. The investment banker incurred out-of-pocket expenses of $10 million and the company incurred expenses of $1 million. This is an example of a:

A. Best efforts deal

B. Hybrid deal

C. Negotiated deal

D. Private placement

E. None of the above

Reference no: EM131813141

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