Flavortech Inc

question 110

Multiple Choice

Flavortech Inc.expects EBIT of $2,000,000 for the coming year.The firm's capital structure consists of 40 percent debt and 60 percent equity,and its marginal tax rate is 40 percent.The cost of equity is 14 percent,and the company pays a 10 percent rate on its $5,000,000 of long-term debt.One million shares of common stock are outstanding.In its next capital budgeting cycle,the firm expects to fund one large positive NPV project costing $1,200,000,and it will fund this project in accordance with its target capital structure.If the firm follows a residual dividend policy and has no other projects,what is its expected dividend payout ratio?

• A) 100%
• B) 60%
• C) 40%
• D) 20%
• E) 0%

---

Definitions:

Positive Symptoms

In psychopathology, the presence of abnormal behaviors or experiences, such as hallucinations or delusions, typically associated with schizophrenia.

Negative Symptoms

Features typically associated with schizophrenia, characterized by the absence or diminution of normal functions, such as blunted affect or social withdrawal.

Schizophrenia

A serious mental disorder characterized by disturbances in thought, perception, and behavior, leading to a disconnection from reality (psychosis).

Hallucinations

Perception of things that are not present, often experienced in mental health disorders.