Residual Dividend Policy. For this and the next question: Caesar Machinery is a large machine shop in

Question:

Residual Policy. For this and the next question: Caesar Machinery is a large machine shop in the southeast side of town. The company's capital budget for the next fiscal year is $60 million. Its optimal calls for a debt ratio of 60%. The company's earnings before interest and taxes (EBIT) are $98 million for the year. The firm has $200 million in assets, pays an average interest of 10% on all its debt, and has a marginal tax rate of 35%. The firm maintains a residual policy and will keep its optimal intact. Calculate the amount after the financing of the company's capital budget.

Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...