Walter Industries Is a Family Owned Concern

question 33

Multiple Choice

Walter Industries is a family owned concern.It has been using the residual dividend model,but family members who hold a majority of the stock want more cash dividends,even if that means a slower future growth rate.Neither the net income nor the capital structure will change during the coming year as a result of a dividend policy change to the indicated target payout ratio.By how much would the capital budget have to be cut to enable the firm to achieve the new target dividend payout ratio? Do not round intermediate calculations. ​

• A) -$1,372,727
• B) -$1,098,182
• C) -$1,537,455
• D) -$1,249,182
• E) -$1,496,273

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Definitions:

Tectonic Plates

Large pieces of the Earth's crust that move, float, and sometimes fracture and whose interaction causes continental drift, earthquakes, volcanoes, mountains, and oceanic trenches.

Ejecta

Material that is expelled or thrown out, especially as a result of volcanic eruption, meteorite impact, or other explosive events.

Sedimentary

Pertaining to rocks formed by the accumulation or deposition of mineral or organic particles at the Earth's surface, followed by compaction.

Sandstone

A sedimentary rock composed mainly of sand-sized minerals or rock grains.