What will be the company''s dividend payout ratio

Reference no: EM1310797

Redwood Systems and forecasting company's income.

Redwood Systems follows a strict residual dividend policy. The company estimates that its capital expenditures this year will be $40 million, its net income will be $30 million, and its target capital structure is 60 percent equity and 40 percent debt. What will be the company's dividend payout ratio?

a. 80%
b. 60%
c. 40%
d. 20%
e. 15%

Reference no: EM1310797

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