Capital Budget of Creative Ventures Incis $1,000,000 the Company Wants

question 33

Multiple Choice

capital budget of Creative Ventures Incis $1,000,000 The company wants to maintain a target capital structure that is 30% debt and 70% equity The company forecasts that its net income this year will be $800,000 If the company follows a residual dividend policy, what will be its total dividend payment?

• A) $100,000
• B) $200,000
• C) $300,000
• D) $400,000
• E) $500,000

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Definitions:

Annual Interest Rate

The percentage increase in money that occurs over a year, which includes interest on loans, deposits, or investments.

Investments

Assets or items acquired with the goal of generating income or appreciating in value over time.

Interest on Interest

The concept of earning interest on the reinvestment of previous interest payments, a compound interest phenomena.

Average Annual Interest Rate

The average amount of interest earned or paid on an investment or loan over a one-year period, expressed as a percentage.