1. ABC Corp.'s projected capital budget is $2,000,000, its target capital structure is 60% debt and 40% equity, and its projected net income is $600,000. If the company follows a dividend policy residuals, what is the total dollar amount of the dividends and the percentage it will pay?

2. The Collins Company projects the following data for the coming year. If the company follows the residual dividend policy AND maintains its current target capital structure, what will its payout rate be?

EBIT	$2,000,000	capital budget	$850,000
Interest rate	10%	%Debt/%Equity	40%/60%
pending debt	$5,000,000	Taxes	40%

3. What is considered the main factor that determines the dividend policy of a company?

Answer rating: 100% (QA)

1 To determine the total dollar amount of dividends and the percentage to be paid by ABC Corp under the residual dividend policy we need to first calc... View the full answer