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How much can be paid out as dividends

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Reference no: EM132976762

Question - Assume a firm has a net profit $20 million last year, its target capital structure is 30% debt and 70 equity, the firm is going to invest in a project which needs initial cost of $9 million.

Required -

(1) How much can be paid out as dividends if the firm applies residual dividend policy?

(2) What is the dividend payout ratio?

Reference no: EM132976762

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