Reference no: EM132928804
Problem 1: Getler Inc.'s projected capital budget is $2,000,000, its target capital structure is 40% debt and 60% equity, and its forecasted net income is $1,425,000. If the company follows a residual dividend policy, how much dividends will it pay or, alternatively, how much new stock must it issue?
a. Dividends $225,422
Stock issued $422
b. Dividends $225,563
Stock issued $563
c. Dividends $225,000
Stock issued $0
d. Dividends $225,281
Stock issued $281
e. Dividends $225,141
Stock issued $141