Residual distribution policy-what will be its payout ratio

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Reference no: EM131179626

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 $800,000. 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: EM131179626

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