Grandin Inc

question 41

Multiple Choice

Grandin Inc.is evaluating its dividend policy.It has a capital budget of $625,000, and it wants to maintain a target capital structure of 60% debt and 40% equity.The company forecasts a net income of $475,000.If it follows the residual dividend policy, what is its forecasted dividend payout ratio?

• A) 40.61%
• B) 42.75%
• C) 45.00%
• D) 47.37%
• E) 49.74%

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Definitions:

Indifference Curve

A graphical representation showing combinations of goods or services among which a consumer is indifferent, depicting preferences for consumption bundles.

Apples

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Bananas

A popular fruit that is long and curved with a soft flesh covered by a yellow peel when ripe.

Utility Function

A mathematical representation that quantifies an individual's preference for various outcomes or goods, indicating their level of satisfaction.