Mortal Inc. expects to have a capital budget of $575,000 next year. The company wants to maintain a target capital structure with 35% debt and 65% equity, and its forecasted net income is $500,000. If the company follows the residual dividend model, how much in dividends, if any, will it pay? a. $111,100 b. $126,250 c. $132,563 d. $118,675 e. $113,625 Portland Plastics Inc. has the following data. If it follows the residual dividend model, what is its forecasted dividend payout ratio? Capital budget $13,500 % Debt 40% Net income (NI) $13,650 a. 42.29% b. 44.73% c. 49.20% d. 40.66% e. 32.53%
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
- Mortal Inc. expects to have a capital budget of $575,000 next year. The company wants to maintain a target capital structure with 35% debt and 65% equity, and its
forecasted net income is $500,000. If the company follows the residual dividend model, how much in dividends, if any, will it pay?
|
a. |
$111,100 |
|
|
b. |
$126,250 |
|
|
c. |
$132,563 |
|
|
d. |
$118,675 |
|
|
e. |
$113,625 |
- Portland Plastics Inc. has the following data. If it follows the residual dividend model, what is its forecasted dividend payout ratio?
|
Capital budget |
$13,500 |
|
% Debt |
40% |
|
Net income (NI) |
$13,650 |
-
|
a. |
42.29% |
|
|
b. |
44.73% |
|
|
c. |
49.20% |
|
|
d. |
40.66% |
|
|
e. |
32.53% |
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