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Oxana [17]
3 years ago
14

Getler Inc.'s projected capital budget is $2,000,000, its target capital structure is 40% debt and 60% equity, and its forecaste

d net income is $1,000,000. If the company follows a residual dividend policy, how much dividends will it pay or, alternatively, how much new stock must it issue?Dividends Stock Issueda.$541,500 $171,475b.$600,000 $190,000c.$514,425 $162,901d.$570,000 $180,500e.$ 0 $200,000
Business
1 answer:
anyanavicka [17]3 years ago
4 0

Answer:

The correct answer to the following question will be Option e (0 $ 200,000).

Explanation:

Residual dividend policy should be used for businesses that fund their capital needs by wealth earned at home. Such that, companies can make investments only if all investment requirements are satisfied by something like internal resources instead of moving to something like the marketplace.

Capital Budget = $2,000,000

Capital structure will be:

Debt = 40%    

Equity = 60%

Income = $1,000,000

So let us measure the balance of our Expected Debt and Equity first:

Debt = 2,000,000 \times  40  \ percent

        = 800,000

Equity = 2,000,000\times  60 \ percent

           = 1,2000,000

As we know our income will be $1,000,000.

Then maybe we can have been using our inner income of $1,000,000 to funding everyone's capital requirement of $1,2000,000.

So,

Residual amount = 1,000,000 - 1,2000,000

                            = -200,000

This suggests that our organization has to sell upwards of $200,000 shares of assets and therefore will not be capable to afford to pay some distributions yet. So that option e would be the right answer.

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Hoi Chong Transport, Ltd. Operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven
Ede4ka [16]

Answer:

The total cost will be "$1,279,286.25".

Explanation:

The total cost at 125000 Km will be:

=125000\times  12.520

=1,565,000 ($)

The total cost at 90000 Km will be:

=90000\times 16.5

=1,485,000 ($)

The variable cost will be:

=\frac{(1,565,000 - 1,485,000)}{(125000 -90000) }

=2.28571 ($)

Now,

Fixed cost = Total \ cost -variable \ c ost

                  = 1,565,000 - 125000\times 2.28571

                  = 1,279,286.25 ($)

5 0
3 years ago
Assume that Swiss investors have francs available to invest in securities, and they initially view U.S. and British interest rat
Salsk061 [2.6K]

The increase in US interest rates relative to the British interest rate would cause the Swiss demand for dollars to increase and the dollar will appreciate against the Swiss franc.

<h3>Why would the demand for dollars increase and the dollar appreciate?</h3>

When the interest rates of the US increases relative to that of the Britain, investors would earn a higher rate of return relative to that of Britain. As a result, investors would prefer to invest in the US.

When there is an increase in the demand for the US dollars relative to the Swiss franc, the US dollars would appreciate.

To learn more about interest rates, please check: brainly.com/question/26164549

8 0
2 years ago
Godart Co. issued $4.5mn notes payable as a scrip dividend that matured in five years. At maturity, each shareholder of Godart's
Ghella [55]

Answer:

$6,750,000

Explanation:

Since it is stated in the question that the 3mn shares will be paid the principal and interest at maturity, and it is not stated the note is compounded, we apply the following simple calculation:

Amount to pay = $4,500,000 + [($4,500,000 × 10%) × 5 years]

                         = $4,500,000 + [$450,000 × 5 years]

                         = $4,500,000 + 2,250,000

Amount to pay = $6,750,000

Therefore, the amount should be paid to the stockholders at the end of the fifth year is $6,750,000.

4 0
3 years ago
Alan Jackson invests $20,000 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 8 yea
kondaur [170]

Answer:

a. $32,800

b. $37,019

c. $37,460

Explanation:

a. The computation of Total Amount Withdrawn by Alan when simple interest is shown below:-

Accumulated amount of money = Invested amount + (Rate of interest × Number of years)

= $20,000 + ($20,000 × 8% × 8)

= $32,800

b. The computation of Total Amount Withdrawn by Alan when annually Compounded is shown below:-

Accumulated amount of money = Invested amount × (1 + rate of interest)^Number of years

= $20,000 × (1 + 0.08)^8

= $20,000 × 1.85093

= $37,019

c. The computation of Total Amount Withdrawn by Alan when semi annually Compounded is shown below:-

Accumulated amount of money = Invested amount × (1 + rate of interest × Number of years ÷ 200)^16)

= ($20,000 × (1 + 0.08 × 8 ÷ 200)^16)

= $20,000 × 1.87298

= $37,460

Therefore we have applied the above formulas.

5 0
4 years ago
Truman Co. sells a large number of common household items, while Stapleton sells a small number of expensive items. The two comp
slava [35]

Answer:

Truman has a higher inventory turnover ratio and Stapleton has a higher gross profit ratio ( D )

Explanation:

Truman sell a large number of common household items ( assuming 100 unit )

while Stapleton sells a small number of expensive items ( assuming 20 units )

lets assume : Truman sells at $5 per unit and Stapleton sells at $50 per unit

with the above assumptions

Truman gross profit ratio = $5 * 100 units = $500

Stapleton gross profit ratio = $50 * 20 units = $1000

from the above assumptions you can deduce that the gross profit made by Stapleton is higher although he sells a smaller amount of goods while Truman has a higher Turnover because of its higher number of sold units

4 0
3 years ago
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