Crawford Inc., a litter recycling company, uses a residual dividend policy. A debt-equity ratio of 1.0 is

Question:

Crawford Inc., a litter recycling company, uses a residual dividend policy. A debt-equity ratio of 1.0 is considered optimal. Earnings for the period just ended were $1,400, and a dividend of $420 was declared. How much in new debt was borrowed? What were total capital outlays?

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...

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