Residual distribution model-residual distribution policy

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Residual Distribution Model

Puckett Products is planning for $2.4 million in capital expenditures next year. Puckett's target capital structure consists of 45% debt and 55% equity. If net income next year is $2.7 million and Puckett follows a residual distribution policy with all distributions as dividends, what will be its dividend payout ratio? Round your answer to two decimal places.

Residual Distribution Policy

Petersen Company has a capital budget of $1.2 million. The company wants to maintain a target capital structure which is 70% debt and 30% equity. The company forecasts that its net income this year will be $500,000. If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio? Round your answer to two decimal places.

Reference no: EM132053025

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