Ask Question
BusinessBusiness
25 July, 20:08

McCann Publishing has a target capital structure of 35% debt and 65% equity. This year's capital budget is $850,000 and it wants to pay a dividend of $400,000. If the company follows a residual dividend policy, how much net income must it earn to meet its capital budgeting requirements and pay the dividend, all while keeping its capital structure in balance?

+1
Answers (1)
  1. 25 July, 20:23
    0
    Answer: $952500

    Explanation: targeted equity ratio is 65% = 0.65

    Capital budget = $850000

    Dividend = net income - (target equity ratio * total budget)

    400000 = N - (0.65 * 850000)

    Make N the subject of formula

    Net income N = $952,500
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “McCann Publishing has a target capital structure of 35% debt and 65% equity. This year's capital budget is $850,000 and it wants to pay a ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Why does the agricultural price supports are inconsistent with free-market principles?
Answers (2)
Free blacks in the United States: a. could testify in court and vote in most states but could carry firearms only with the approval of the local sheriff. b. sometimes became wealthy enough to own slaves. c.
Answers (1)
Who sells dragon scales? Ya know like the ones ya put on chainmail. I need to know like soon.
Answers (1)
If you make a mistake on a job application you should
Answers (2)
According to CEO Heidi Ganahl, Camp Bow Wow requires a strong and consistent corporate culture to keep all local franchise owners "on the same page" and to follow a common template for the business and brand.
Answers (1)
New Questions in Business
A what type of budget is a type of financial report that scrutinizes the inflow and outflow of money in a given financial year
Answers (1)
Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm's EVA?
No Answers
Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. his insurance agent told him the policy would be paid up if he reached age 100. the present cash value of the policy equals $250,000.
Answers (1)
On June 1, Davis Inc. issued an $84,000, 5%, 120-day note payable to Garcia Company. Assume that the fiscal year of Garcia ends June 30.
Answers (2)
You invest $50,000 now and receive $10,000 per year for 15 years starting at the end of the first year.
Answers (1)
Home » Business » McCann Publishing has a target capital structure of 35% debt and 65% equity. This year's capital budget is $850,000 and it wants to pay a dividend of $400,000.
Sign Up Forgot Password?