The Garlington Corporation expects next years net income to be $15 million. The firms debt/assets ratio currently

Question:

The Garlington expects next year’s net income to be $15 million. The firm’s debt/assets ratio currently is 40 percent. Garlington has $12 million of profitable investment opportunities, and it wishes to maintain its existing debt/assets ratio. According to the residual policy, how large should Garlington’s payout ratio be next year?

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