Banerjee Inc

question 23

Multiple Choice

Banerjee Inc.wants to maintain a target capital structure with 30% debt and 70% equity.Its forecasted net income is $550,000,and its board of directors has decreed that no new stock can be issued during the coming year.If the firm follows the residual dividend policy,what is the maximum capital budget that is consistent with maintaining the target capital structure?

• A)$673,652
• B)$709,107
• C)$746,429
• D)$785,714

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Definitions:

Sampling Distribution

A distribution of probabilities associated with a particular statistic, originating from a random sample.

Random Sample

A subset of a statistical population in which each member of the subset has an equal probability of being chosen.

Sampling Distribution

The likelihood distribution of a specific statistic derived from a random sampling.

Infinite Number

A concept in mathematics that describes a quantity without bounds or limit.