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ConceptsCoach
ConceptsCoach, Certified Public Accountant (CPA)
Category: Finance
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Experience:  Chartered Accountant and MBA
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Brammer Corp.s projected capital budget is $1,000,000, its

Resolved Question:

Brammer Corp.'s projected capital budget is $1,000,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $550,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out?
$122,176
$128,606
$135,375
$142,500
$150,000
Submitted: 6 years ago.
Category: Finance
Expert:  ConceptsCoach replied 6 years ago.

 

$150,000

 

Calculation:

 

= $1,000,000 * 40% = $400,000

Amount of dividend = $550,000 less $400,000 (amount of new investment to be financed from equity) = $150,000

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