Dentaltech Inc

question 13

Multiple Choice

Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend policy and also maintains its target capital structure, what will its payout ratio be? EBIT $2,000,000 Capital budget $850,000
Interest rate 10% % Debt 40%
Debt outstanding $5,000,000 % Equity 60%
Shares outstanding $5,000,000 Tax rate 40%

• A) 37.2%
• B) 39.1%
• C) 41.2%
• D) 43.3%
• E) 45.5%

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Definitions:

Axis

A line or reference around which something rotates or is symmetrically arranged, often used in geometry and physics to describe orientation.

Hormone

A naturally occurring compound in the body that directs and controls the operation of specific cells or organs.

Endosperm

A material formed within the seeds of the majority of flowering plants after fertilization, providing nutrition to the growing embryo.