ABC Co follows a residual dividend policy and maintains a constant debt-equity ratio. There are 12,000 shares of stock outstanding at a market price of $15 a share. There are 300 bonds outstanding, which are selling at $1,200. The projected spending on capital projects is $210,000 for next year. Earnings for next year are estimated at $100,000. What is the projected dividend amount per share?

a. $6.67

b. $2.00

c. $2.50

d. $8.33

Answer rating: 100% (QA)

Market value of equity 15000 12 180000 Market value of debt 300 1200 360000 Debteq... View the full answer