Residual distribution policy

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Reference no: EM131088172

Residual Distribution Policy

Petersen Company has a capital budget of $1.3 million. The company wants to maintain a target capital structure which is 55% debt and 45% equity. The company forecasts that its net income this year will be $600,000. 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: EM131088172

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