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What is the projected DPS

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Reference no: EM132729330

Problem - Components Manufacturing Corporation (CMC) has 1 million shares of stock outstanding. CMC has a target capital structure with 60% equity and 40% debt. The company projects net income of $5 million and investment projects requiring $6 million in the upcoming year.

Required -

a. CMC uses the residual distribution model and pays all distributions in the form of dividends. What is the projected DPS?

b. What is the projected payout ratio?

Reference no: EM132729330

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