Grandin Inc

question 41

Multiple Choice

Grandin Inc.is evaluating its dividend policy.It has a capital budget of $625,000, and it wants to maintain a target capital structure of 60% debt and 40% equity.The company forecasts a net income of $475,000.If it follows the residual dividend policy, what is its forecasted dividend payout ratio?

• A) 40.61%
• B) 42.75%
• C) 45.00%
• D) 47.37%
• E) 49.74%

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Definitions:

Exchange Rates

The price of one type of currency when exchanged for another.

Statement Of Retained Earnings

A financial statement that outlines the changes in retained earnings for a specific period, factoring in net income and dividends paid to shareholders.

Dividends

Payments made by a corporation to its shareholder members. It’s a share of profits distributed.