Computing dividend pay-out ratio

Reference no: EM1315959

Ronaldo Inc. has a capital budget of $1,000,000, but it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts this year's net income to be $600,000. If the company follows a residual dividend policy, what will be its dividend pay-out ratio?

a. 16.67%

b. 20.00%

c. 25.00%

d. 33.33%

e. 35.00%

Reference no: EM1315959

Questions Cloud

Exponential growth of population : Suppose that the town of Grayrock had a population of 10,000 in 1998 and a population of 12, 000 in 2003.

Finding net income and effective tax rate : Finding net income and effective tax rate from given financial ratios - Compute the Company's 2007 pro-forma net income (or adjusted net earnings) that is indicative of the Company's net income going forward

Solution utilizing graphical method : Solution utilizing graphical method. Compute the following linear programming problem. Among which of the following points (X, Y) is not a feasible corner point.

Derivation of marshillian demand function : Imagine a person's utility function over two goods, X and Y, where Y represents dollars. Specifically, assume a Cobb-Douglas utility function:

Computing dividend pay-out ratio : Computing dividend pay-out ratio and the company forecasts this year's net income to be $600,000

Identifying error in the given statement related to sample : The researcher found that Lincoln's educational score did not correlate with the expected variables.

What would happen to the stock markets rate of return : Risk and return involves calculation of stock's beta and expected return and what would happen to the stock markets rate of return?

Calculation of tradable pollution permits : Assume that there are two power generating plants that emit SO 2 (sulphur dioxide). In the absence of regulation they each emit 10 tons of pollution per month.

Find the unknown price from the information : Find the unknown price from the information

User Account

All Pages