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mamaluj [8]
3 years ago
6

United Builders wants to maintain a target capital structure with 30% debt and 70% equity. Its forecasted net income is $550,000

, and because of market conditions, the company will not issue any new stock during the coming year. If the firm follows the residual dividend policy, what is the maximum capital budget that is consistent with maintaining the target capital structure?
Business
1 answer:
Viktor [21]3 years ago
6 0

Answer:

The maximum capital budget that is consistent with maintaining the target capital structure is $785,714

Explanation:

The computation of the maximum capital budget is shown below:

= Net income × (debt percentage ÷ equity percentage)

= $550,000 × (30% ÷ 70%)

= $235,714

The net income would be equal to equity i.e $550,000 as it reflect the maximum amount

So, the total and maximum amount of the capital structure would be

= $550,000 + $235,714

= $785,714

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Answer:

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Find both the arithmetic growth rate and the geometric growth rate of the dividends for Custer's Ice Cream Shoppes.
Katen [24]

Answer:

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Dividend Arithmetic Growth rate is calculated as follows

Step 1:

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Step 3:

Make an average by dividing the sum of all growths by Number of years in  growth.

Dividend Arithmetic Growth rate is calculated as follows

Step 1:

Find the growth rate of each year

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A MS Excel File is attached for the working. please find it.

Download xlsx
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