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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? Assume that all distributions are paid out as dividends. Group of answer choices

Respuesta :

Answer:

$150,000

Explanation:

The computation of the total dividend pay out is shown below:

= Forecasted net income - (equity percentage  × projected capital budget)

= $550,000 - (40% × $1,000,000)

= $550,000 - $400,000

= $150,000

We simply deduct the equity value from the forecasted net income so that the accurate value can come

All other information which is given is not relevant. Hence, ignored it

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