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kkurt [141]
3 years ago
12

Puckett products is planning for $5 million in capital expenditures next year. puckett’s target capital structure consists of 60

% debt and 40% equity. if net income next year is $3 million and puckett follows a residual distribution policy with all distributions as dividends, what will be its dividend payout ratio
Business
1 answer:
Whitepunk [10]3 years ago
7 0


To find out the payout, we must first figure out the amount of equity we are retaining for capital budget and then subtract from our Net Income. This calculation will give us the amount in which will be paid out and we can then divide this remaining amount by our Net Income to find the payout ratio.

 

Distribution = Net Income - (Target Equity Ratio * Target Capital Budget)

Net Income$3,000,000

Target Capital Budget$5,000,000

Target Equity Ratio 40%

Distribution =$1,000,000

Knowing our distribution is $1,000,000, we can divide the distribution by Net Income to find the payout ratio.

 

Distribution$1,000,000

Net Income$3,000,000

Payout Ratio 33.33% or 1:3

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At the beginning of the year, Rangle Company expected to incur $59,000 of overhead costs in producing 5,900 units of product. Th
kaheart [24]

Answer: Total cost of the units made in January = $38,500

Explanation:

Given that,

At the beginning of the year, overhead costs = $59,000

Units produced at this cost = 5900 units

Direct material cost = $25 per unit

Direct labor cost = $35 per unit

Units produced during January = 550 units

Predetermined overhead rate = \frac{Total\ expected\ overhead\ cost}{Number\ of\ units}

= \frac{59000}{5900}

= $10 per unit

Now,

Costs incurred in January:

Direct material cost = $25 per unit × 550 units = $13750

Direct labor cost = $35 per unit × 550 units = $19250

Overhead cost = $10 per unit × 550 units = $5500

∴ Total cost of the units made in January = Direct material cost + Direct labor cost + Overhead cost

= 13750 + 19250 + 5500

= $38,500

4 0
3 years ago
When the interest rate in an economy increases, it is likely the result of either: an increase in the government budget surplus
SIZIF [17.4K]

Answer: c). a decrease in the government's budget surplus or an increase in its budget deficit.

Explanation: Budget surplus refers to the excess of government revenue from taxes and other sources over its expenditure. While, budget deficit refers to the excess of government expenditures over its revenue.

BS= T>G

BD= G>T

A decrease in the government's budget surplus or an increase in its budget deficit leads to an increase in the interest rate in the economy. Thus the correct option is c.

5 0
3 years ago
In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economi
madam [21]

Answer: True

Explanation:

A price break is a price reduction especially when one buys in bulk. Price Break model is used when there is variation between the inventory price and the order size.

In a price break model. the economic order quantity is computed for every possible price and matched to the inventory amount available at that price. It can then be used to ascertain if the smallest cost quantity is possible.

3 0
3 years ago
Abbot Inc. is considering the following investment opportunities. Required Compute the future value under each of the investment
Over [174]

Answer:

$ 67,196

$132482

$88,727

$131,761

Explanation:

The formula for calculating future value:

FV = P (1 + r/m)^mn

FV = Future value  

P = Present value  

R = interest rate  

N = number of years  

m =number of compounding

$50,000 x ( 1 + 0.06/2)^10 = $67,196

$60,000 x ( 1 + 0.08/4)^40 = $132,482

$40,000 x (1 + 0.1/12)^96 = $88,727

$80,000 x ( 1 + 0.05 /12) ^120 = $131,761

7 0
3 years ago
List the three areas of the health triangle with an example of how to improve each dimension of health.
attashe74 [19]
Health is the measure of our body's overall efficiency and well-being. The health triangle is a tool that can be used to examine the different aspects of health. The three areas of the health triangle are the physical, mental and social health. The physical health refers to the body's efficiency to function. It can be improved with regular exercise and a healthy and balanced nutrition. The mental health is the term that describes how we think, feel and cope with events in our life. A way to improve our mental health is to accomplish better stress management. Finally, the social health deals with the way we react to people within our environment. One way of improving our social health is to focus on building sincere and solid relationships and invest on our friendships. 
7 0
3 years ago
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