Silvana Inc A)372%
B)39

question 34

Multiple Choice

Silvana Inc.projects the following data for the coming year.If the firm follows the residual dividend policy and also maintains its target capital structure,what will its payout ratio be? $$\begin{array} { l l r } \text { EBIT } & \$ 2,000,000 \text { Capital budget } & \$ 850,000 \\\text { Interest rate } & 10 \% \% \text { Debt } & 40 \% \\\text { Debt outstanding } & \$ 5,000,000 \% \text { Equity } & 60 \% \\\text { Shares outstanding } & \$ 5,000,000 \text { Tax rate } & 40 \%\end{array}$$

• A)37.2%
• B)39.1%
• C)41.2%
• D)43.3%
• E)45.5%

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Definitions:

Adjusting Entries

Adjusting entries are journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Loan Repay

Loan repayment is the act of paying back borrowed funds to the lender, typically in installments that include both principal and interest.

Notes Payable

Financial obligations represented by written promissory notes requiring the borrower to repay the amount borrowed plus interest.

Accounts Payable

Liabilities or money owed by a business to its creditors or suppliers for goods and services received.