What is the firm expected dividend payments

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Problem 1: A firm expects to have net income of $5,000,000 during the next year. The company's target capital structure is 60% debt and 40% equity. The company's director of capital budgeting has determined that the optimal capital budget for the coming year is $5,000,000. If MSL Tech follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming year's dividend, then what is the firm's expected dividend payments?

Option 1: $2,000,000
Option 2: $3,000,000
Option 3: $5,000,000
Option 4: $6,000,000

Problem 2: Using the data from Question above, find the dividend payout ratio for the company.

Option 1: 20%
Option 2: 40%
Option 3: 60%
Option 4: 50%

Reference no: EM132955306

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