Strategic Systems Inc

question 20

Multiple Choice

Strategic Systems Inc. expects to have net income of $800,000 during the next year. Its target, and current, capital structure is 40 percent debt and 60 percent common equity. The Director of Capital Budgeting has determined that the optimal capital budget for next year is $1.2 million. If Strategic uses the residual distribution model (with all distributions in the form of dividends) to determine next year's dividend payout, what is the expected dividend payout ratio?

• A) 0%
• B) 10%
• C) 28%
• D) 42%
• E) 56%

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Definitions:

Mutated Chromosomes

Chromosomes that have undergone changes or alterations in their structure or genetic sequence.

One Third

A fraction representing a division of a whole into three equal parts, indicating that one part is being considered out of the three.

One Fourth

A fraction representing one part of four equal parts of a whole, often written as 1/4.

One Eighth

A fraction representing one part of eight equal parts of a whole.