What is the expected payout ratio

Assignment Help Financial Management
Reference no: EM131495305

Bike Inc.’s expected net income for next year is $1 million. The company’s target and current capital structure is 40% debt and 60% common equity. The optimal capital budget for next year is $1.2 million. If Bike uses the residual distribution model to determine next year’s distribution and makes all distributions in the form of dividends, what is the expected payout ratio?

Please Show calculations and formulas

Reference no: EM131495305

Questions Cloud

Expected annualized yield from this transaction : Determine Earl's expected annualized yield from this transaction.
Determine kevins annualized yield on this investment : Determine Kevin's annualized yield on this investment.
Firm need to reach the cash break-even point : How many units does the firm need to reach the cash break-even point?
Assuming all costs vary proportionately with sales : Sales are expected to increase by 22 percent next year. What is the pro forma addition to retained earnings assuming all costs vary proportionately with sales?
What is the expected payout ratio : If Bike uses residual distribution model to determine next year’s distribution and makes all distributions in form of dividends, what is expected payout ratio?
Compute landon self-employment tax liability : Compute Landon’s self-employment tax liability and the allowable income tax deduction of the self-employment tax paid.
What is palm trees intrinsic value of equity : What is Palm Tree’s intrinsic value of equity? What is its intrinsic stock price per share?
Cost of equity under new capital structure : The Tech Hardware Company is trying to estimate its optimal capital structure. Determine Tech’s new cost of equity under the new capital structure with 45% debt
What price must each aquarium be sold for seagulls ebit : At what price must each aquarium be sold for Seagull’s EBIT to be $90,000?

Reviews

Write a Review

Financial Management Questions & Answers

  About the retirement goals

Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he..

  What will be the payoff of the put

You own a put option on Ford stock with a strike price of $10. The option will expire in exactly six months’ time. If the stock is trading at $8 in six months, what will be the payoff of the put?

  What would capital gains and dividend yield be for year

You have been asked to value a stock that will not pay a dividend until three years from now. At that time you estimate the dividend will be $1.40. You estimate that it will grow by 10% for the two following years and at 5% thereafter. What would the..

  Current law regarded additional first year depreciation

Tariq purchased a new business asset (five-year property) on September 30, 2015, at a cost of $150,000. On October 4, 2015, Tariq placed the asset in service. This was the only asset Tariq placed in service 2015. Tariq did not elect s. 179 and follow..

  Rate of return on this investment

Martin's Inc. is expected to pay annual dividends of $2.50 a share for the next three years. After that, dividends are expected to increase by 3% annually. what is the current value of this stock you if you require 9% rate of return on this investmen..

  What percentage of value should be allocated to equity

What percentage of value should be allocated to equity in WACC computations for a firm with $60 million in debt selling at 85% of par, $70 million in book value of equity, and $50 million in market value of equity?

  Dividend payment-what is the required return

The next dividend payment by Halestorm, Inc., will be $1.56 per share. The dividends are anticipated to maintain a growth rate of 4 percent forever. If the stock currently sells for $29 per share, what is the required return?

  What change might be expected on balance sheets of customers

A large manufacturing firm has been selling on a 3/10, net 30 basis. The firm changes its credit terms to 2/20, net 90. What change might be expected on the balance sheets of its customers?

  Specializes in underwriting new issues by small firms

Work in excel, security brokers inc. specializes in underwriting new issues by small firms on a recent offerering of beedles inc, the term as follows price to public $ 15 per share, number of shares $3 million , proceeds to beedles $14,000,000.

  Contributed for state and federal unemployment

John Rose, owner of Rose Corporation, has three employees who earn 500 dollars, 600 dollars, and 700 dollars each week. After 12 weeks, how much has John contributed for state and federal unemployment? Assume a state rate of 5.4 percent and a federal..

  Requires an initial capital expenditure for an asset costing

Consider a project that lasts three years and requires an initial capital expenditure for an asset costing $250,000. You can depreciate the asset in a straight line over five years, although you plan to sell the asset after the three years for $150,0..

  What must be the growth rate they expect of the firm

Eastern Electric currently pays a dividend of about $1.65 per share and sells for $30 a share. If investors' required rate of return is 10%, what must be the growth rate they expect of the firm?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd