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Dividend payout

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Dividend Payout

The AA Corporation expects next year's net income to be $20 million. The firm's debt ratio is currently 50%. AA has $10 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual distribution model (assuming all payments are in the form of dividends), how large should AA's dividend payout ratio be next year? Round your answer to two decimal places.

Reference no: EM13826766

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