Pavlin Corp

question 19

Multiple Choice

Pavlin Corp.'s projected capital budget is $2,000,000,its target capital structure is 40% debt and 60% equity,and its forecasted net income is $1,150,000.If the company follows the residual dividend model,how much dividends will it pay or,alternatively,how much new stock must it issue?

• A) $00;$50,000
• B) $42,500;$39,500
• C) $52,500;$50,500
• D) $40,500;$48,500
• E) $52,500;$56,000