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Nookie1986 [14]
3 years ago
10

Petersen Company has a capital budget of $1.0 million. The company wants to maintain a target capital structure that is 55% debt

and 45% equity. The company forecasts that its net income this year will be $800,000. If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio?
Business
1 answer:
kenny6666 [7]3 years ago
7 0

Answer: 43.75%

Explanation:

Payout ratio = Dividends paid / Earnings

Company has a Capital budget of $1 million which must be financed by 45% equity.

= 1,000,000 * 45%

= $450,000

This will be taken from the Net income which would leave the following for dividends;

= 800,000 - 450,000

= $350,000

Payout ratio = 350,000/800,000

= ‭0.4375‬

= 43.75%

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Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct
Paladinen [302]

Answer:

Overhead at the end of the year was $3,570 under-applied

Explanation:

For computing the ended overhead amount, first, we have to compute the predetermined overhead rate. The formula is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours)

= $521,220 ÷ 21,900 hours

= $23.8

Now we have to find the actual overhead which equals to

= Actual direct labor-hours × predetermined overhead rate

= 21,750 hours × $23.8

= $517,650

So, the ending overhead equals to

= Actual manufacturing overhead - actual overhead

= $521,220 - $517,650

= $3,570 under-applied

8 0
2 years ago
An engineer bought a $1000 bond of an American airline for $875 just after an interest payment had been made. The bond paid a 6%
goldenfox [79]

Answer:

Number of coupon payments = 13.5*2= 27

Coupon = 6%*1000/2= 30

Let rate be r

Present value of all future payments = $87

875 = 30*(1-1/(1+r)^27)/r + 1000/(1+r)^27

R= 3.74%

Nominal rate = 3.74%*2 = 7.49%

8 0
3 years ago
A U.S. firm sells merchandise today to a British company for £150,000. The current exchange rate is $1.55/£ , the account is pay
Andre45 [30]

Answer:

b

Explanation:

4 0
3 years ago
On the basis of this information, which of the following statements is CORRECT? a. Prestopino's cash on the balance sheet at the
mylen [45]

Answer:

b. Prestopino had negative net income in the current year

Explanation:

Retained earnings at the end of previous year were $700,000, but retained earnings at the end of current year had declined to $320,000.

• The company does not pay dividends.

• The company's depreciation expense is its only non-cash expense; it has no amortization charges.

• The company has no non-cash revenues.

• The company's net cash flow (NCF) for current year was $150,000.

On the basis of this information, which of the following statements is CORRECT? Prestopino had negative net income in the current year

Prestopino DECPRECIATION expense in the current year was less than $150,000 and Prestopino had postive net income in the currnet year however, this income was less than it was in the previous year income.

Prestopino NCF in the current year must be higher than its NCF in the previous year and it cash on the balance at the end of the year must be lower than the cash it had on the balance sheet at the end of previous year

8 0
3 years ago
In general terms, how would a change in investment opportunities affect the payout ratio under the residual payment policy?
adell [148]

Companies with residual dividend policies priorities paying capital expenditures out of earnings.

<h3>What is payout ratio?</h3>

The payout ratio, which is calculated as a percentage of the firm's total earnings, demonstrates the part of earnings that a company distributes to its shareholders in the form of dividends. By dividing the total dividends given out by the net income made, the computation is arrived at.

For dividend investors, the dividend payout ratio is a crucial indicator. It demonstrates how much of a company's earnings are distributed to investors. The higher that number, the less cash a corporation has left over to fund dividend growth and corporate expansion.

Companies with residual dividend policies priorities paying capital expenditures out of earnings. Any unused revenues are then used to pay dividends. Long-term debt and equity are often both parts of a company's capital structure.

To learn more about payout ratio refer to:

brainly.com/question/13083753

#SPJ4

6 0
1 year ago
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