Dentaltech Inc

question 37

Multiple Choice

Dentaltech 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? EBIT
$2,000,000
Capital budget
$850,000
Interest rate
10%
% Debt
40%
Debt outstanding
$5,000,000
% Equity
60%
Shares outstanding
$5,000,000
Tax rate
40%

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

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Definitions:

Secondary Reinforcer

A stimulus that gains its reinforcing power through its association with a primary reinforcer; not naturally rewarding.

Negative Reinforcement

A psychological principle where the removal of an adverse stimulus strengthens a behavior.

Behavior

Behavior refers to the actions or reactions of organisms or systems, usually in response to external stimuli, within their environment.

Increase

A rise in the amount, number, or degree of something.