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:

Right-To-Work State

A state that prohibits agreements between labor unions and employers that make membership, payment of union dues, or fees a condition of employment, either before or after hiring.

Moderate Union

A labor union that adopts a less confrontational stance towards employers and focuses on negotiation and compromise.

Out-Of-Turn Promotion

A promotion given to an employee ahead of others, typically bypassing the standard protocol or hierarchy.

Taft-Hartley Act

A U.S. federal law enacted in 1947 that restricts the activities and power of labor unions.