Torrence Inc $$\begin{array} { l r } \text { Capital budget } & \$ 1,025,000 \\\% \text { Debt } & 60 \% \\\text { Net income (NI) } & \$ 665,000\end{array}$$

question 60

Multiple Choice

Torrence Inc.has the following data.If it uses the residual dividend model,how much total dividends,if any,will it pay out? $$\begin{array} { l r } \text { Capital budget } & \$ 1,025,000 \\\% \text { Debt } & 60 \% \\\text { Net income (NI) } & \$ 665,000\end{array}$$
?

• A) $316,200
• B) $211,650
• C) $234,600
• D) $255,000
• E) $193,800

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Definitions:

Present Value

The value today of a sum of money or sequence of cash flows expected in the future, calculated using a designated interest rate.

Contingent Liabilities

Possible obligations that might arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more future events.

U.S. GAAP

Generally Accepted Accounting Principles in the United States, a framework of accounting standards, principles, and procedures.

Current Liabilities

Short-term financial obligations that a company is expected to pay within one year or one operating cycle, whichever is longer.