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What should be BIT dividend payout ratio this year

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Problem - Baker Island Tours (BIT) expects earnings to grow at a constant rate of 4 percent forever. Its target debt/assets ratio is 40 percent, and it expects to have profitable investments of $1.3 million this year. BIT plans to continue paying the same dividend that has been paid the past 10 years, $2.25 per share, long into the future. The firm has 500,000 shares of stock outstanding. If net income is expected to be $2 million, what should be BIT's dividend payout ratio this year?

Reference no: EM132698764

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