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How larger should firms dividend payout ratio

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Question - The firm expects next year's net income to be birr 15 million. The firm's debt ratio is currently 40%. The firm has birr 12 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 larger should firm's dividend payout ratio be next year?

Reference no: EM132532215

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