The dividend if it follows a residual dividend policy

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Reference no: EM131328658

Marcus, Inc. has a capil budget of $1,500,000 and it wants to pay a dividend of $600,000. Its target capital structure is 45% debt and 55% equity. How much net income must it earn to meet its captial budgeting requirements and pay the dividend if it follows a residual dividend policy. It wants to maintain its capital structure of 45% debt and 55% equity.

a. $825,000

b. $1,275,000

c. $1,425,000

d. $675,000

e. none of above

Reference no: EM131328658

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