Purcell Farms Inc ?
A) 68

question 10

Multiple Choice

Purcell Farms Inc.has the following data,and it follows the residual dividend model.Currently,it finances with 15% debt.Some Purcell family members would like for the dividend payout ratio to be increased.If Purcell increased its debt ratio,which the firm's treasurer thinks is feasible,by how much could the dividend payout ratio be increased,holding other things constant? $$\begin{array} { l r } \text { Capital budget } & \$ 5,000,000 \\\text { Net income (NI) } & \$ 5,500,000 \\\% \text { Debt now } & 15 \% \\\% \text { Debt after change } & 80 \%\end{array}$$
?

• A) 68.5%
• B) 60.9%
• C) 60.3%
• D) 63.8%
• E) 59.1%

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Definitions:

Opportunity Cost

The value of the next best alternative foregone as the result of making a decision.

Point C

Typically refers to a specific point on a curve in economics, often used in graphs to demonstrate concepts like optimal production levels or economic equilibrium.

Opportunity Cost

The sacrifice made by not opting for the next prime selection during decision-making.

Point C

Typically refers to a specific point on a graph or model in economics, which could denote a particular state or condition in an economic analysis.