Banerjee Inc

question 37

Multiple Choice

Banerjee Inc.wants to maintain a target capital structure with 35% debt and 65% equity.Its forecasted net income is $150,000,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 model,what is the maximum capital budget that is consistent with maintaining the target capital structure?

• A) $286,154
• B) $223,846
• C) $230,769
• D) $205,385
• E) $186,923

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