MJI Shippers has a current and target capital structure of 35 percent debt and 65 percent equity. This past year MJI, which uses the residual distribution model and makes all distributions in the form of dividends, had a dividend payout ratio of 45 percent and net income of $850,000. What was MJI’s capital budget?

MJI Shippers has a current and target capital structure of 35 percent debt and 65 percent equity. This past year MJI, which uses the residual distribution model and makes all distributions in the form of dividends, had a dividend payout ratio of 45 percent and net income of $850,000. What was MJI’s capital budget?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 11P

See similar textbooks

Similar questions

Steph & Sons has a capital structure that consists of 20 percent equity and 80 percent debt. The company expects to report $3 million in net income this year, and 60 percent of the net income will be paid out as dividends. What is the debt structure of the capital budget?
altamonte telecommunications has a target capital structure that consist of 45% debt and 55% equity. the company anticipates that its capital budget for the upcoming year will be $1,000,000. if altamonte reports net income of $1,200,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio?
Plato, Inc., expects to have net income of $5,000,000 during the next year. Plato’s target capital structure is 35 percent debt and 65 percent equity. The company’s director of capital budgeting has determined that the optimal capital budget for the coming year is $6,000,000. If Plato follows a residual distribution policy (with all distributions in the form of dividends) to determine the coming year’s dividend, then what is Plato’s payout ratio? 38% 42% 58% 33% 22%
Altamonte Telecommunications has a target capital structure that consists of 60% debt and 40% equity. The company anticipates that its capital budget for the upcoming year will be $2,000,000. If Altamonte reports net income of $1,300,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio? Round your answer to two decimal places.
Blue Co. has a capital structure that consists of 25% equity and 75% liabilities. The company expects to report P3,000,000 in net income this year, and 50% of the it will be paid out as dividends to the shareholders. Determine how large must the firm’s capital budget be this year without resorting to issue any new common stock.
Strategic Systems, Inc., expects net income of $800,000 for next year. Its target capital structure is 40 percent debt and 60 percent common equity. The Director of Capital Budgeting has determined that the optimal capital budget for next year is $1.2 million. If Strategic uses the residual dividend policy to determine next year’s dividend payout, what is the expected payout ratio? 0% 10% 67% 80% 90%
LoveDebt Ltd. has a target capital structure which consists of 60% of debt and 40% of equity. The company anticipates that its capital budget for the upcoming year will be $3,500,000. If LoveDebt Ltd. reports net income of $2,500,000 and it follows a residual dividend payout policy, what will be its dividend payout ratio?
Altamonte Telecommunications has a target capital structurethat consists of 45% debt and 55% equity. The company anticipates that its capital budgetfor the upcoming year will be $1,000,000. If Altamonte reports net income of $1,200,000and it follows a residual dividend payout policy, what will be its dividend payout ratio?
Brock Brothers wants to maintain its capital structure which is 30 percent debt and 70 percent equity. The company forecasts that its net income this year will be $1,000,000. The company follows a residual distribution policy (with all distributions in the form of dividends), and anticipates a dividend payout ratio of 40 percent. What is the size of the company’s capital budget? $ 600,000 $ 857,143 $1,000,000 $1,428,571 $2,000,000
Altamonte Telecommunications has a target capital structure that consist of 70% debt and 30% equity. The company anticipates that its capital budget for the upcoming year will be $2,000,000. If Altamonte reports net income of $1,100,000 end it follows a residual, dividend, payout policy, what will be its dividend payout ratio? Round your answer to two decimal places.
SMPH has a strict residual dividend policy and they projected that the net result of their operation this year is positive at P12,000,000. SMPH has a target capital budget of P10,000,000 and a funding structure of 30% debt and 70% equity.How much of the net income will be used to fund the equity portion of the capital budget?