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Sonbull [250]
3 years ago
9

The projected capital budget of Kandell Corporation 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?
a. $122,176
b. $128,606
c. $135,375
d. $142,500
e. $150,000
Business
2 answers:
Ira Lisetskai [31]3 years ago
8 0

Answer:

The correct answer is option (e).

Explanation:

According to the scenario, the computation of the given data are as follows:

Capital budget = $1,000,000

Debt = 60%

Equity = 40%

Net income = $550,000

So, we can calculate the total dividend by using following formula:

Total dividend = net income - ( Equity × Capital budget )

= $550,000 - ( 40% × $1,000,000 )

= $550,000 - $400,000

= $150,000

Stells [14]3 years ago
6 0

Answer:  e

150,000

Explanation:

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