What will abc dividend payout be

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ABC Corp. has a target debt-to-equity structure of 25/75. Management has decided on a capital budget of $1.4 million for next year. Sales are forecasted at $18 million, with a net margin of 8.8%. Management strictly follows a residual distribution model and pays all distributions as dividends.

Show all work.

-What will ABC's dividend payout be?

-Discuss the primary disadvantage of residual distribution models.

-What advice would you give to management on how to determine the optimal dividend policy?

Reference no: EM133061087

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