How much dividend lily fashion house can pay

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Net profit of Lily Fashion House Ltd in the current year is $2,575, 000. The company is planning to launch a project that will requires an investment of $745 000 next year. Today the company's stock has market value of $22/share. Lily Fashion House has the current capital structure of 60% in equity and 40% in debt.

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Problem 1: How much dividend Lily Fashion House can pay its shareholders this year and what is dividend payout ratio of the company. Assume the Residual Dividend Payout Policy applies?

Reference no: EM132711737

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