Defined as net income divided by beginning-year equity

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At year-end 1998, Acme Inc. had total assets of $300 million, and sales for 1998 were $900 million. The company has a 33.33% debt to total assets ratio. Sales for 1999 are expected to increase by 25%. Assuming constant asset turnover and leverage, and assuming an expected return on equity (ROE) at year-end 1999 of 30% (defined as Net Income divided by beginning-year Equity), what, if anything, can you say about the expected 1999 dividend pay-out rate? (Also assume no external equity will be raised)

Reference no: EM131065163

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