Hermes Co. has a capital budget of $1,200,000. The company wants to maintain a target capital structure which is 60 percent debt and 40 percent equity. The company forecasts that its net income this year will be $600,000. If the company follows a residual dividend policy, what will be its payout ratio? 

Answer rating: 100% (QA)

To find the payout ratio under a residual dividend policy we first need to calculate the ... View the full answer