Silvana Inc A) 372%
B) 39

question 22

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?
$\begin{array}{l}\begin{array}{lc}\text { EBIT } & \$ 2,000,000 \text { Capital budget } \\\text { Interest rate } & 10 \% \% \text { Debt } \\\text { Debt outstanding } & \$ 5,000,000 \% \text { Equity } \\\text { Shares outstanding } & \$ 5,000,000 \text { Tax rate }\end{array}\begin{array}{r}\$ 850,000 \\40 \% \\60 \% \\40 \%\end{array}\end{array}$

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

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide how financial statements are prepared and presented globally.

Accounting Treatments

Methods or procedures applied in preparing and presenting financial statements, based on guidelines from accounting standards.

Credit Risk

The potential for loss due to a borrower's failure to make payments on any type of debt.

Principal

The original amount of a debt or investment before interest.