ABC Inc. keeps a target capital structure of 0.25 and adopts a residual dividend policy. The firm just knows that next year it will need $1,700 for new investments. The after-tax earnings this year are $2,700. What is the amount of dividends that shareholders can expect to receive this year?

A) $1,340

B) $1,360

C) $3,500

D) $6,500

explain.

Answer rating: 100% (QA)

Target Capital Structure of Debt Equity ratio 025 Debt 025 Equity 1 So the Debt portion is ... View the full answer