Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend model and also maintains its target capital structure, what will its dividend payout ratio be? $$\begin{array} { l c l c }
\text { EBIT } & \$ 2,000,00 & \text { Capital budget } & \$ 850,000 \
\text { Interest rate } & 10 \% & \% \text { Debt } & 40 \% \
\text { Debt outstanding } & \$ 5,000,00 & \% \text { Equity } & 60 \% \
\text { Shares outstanding } & 5,000,000 & \text { Tax rate } & 40 \%
\end{array}$$
A) 37.2%
B) 39.1%
C) 41.2%
D) 43.3%
E) 45.5%

Question

Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend model and also maintains its target capital structure, what will its dividend payout ratio be? $$\begin{array} { l c l c } 
\text { EBIT } & \$ 2,000,00 & \text { Capital budget } & \$ 850,000 \
\text { Interest rate } & 10 \% & \% \text { Debt } & 40 \% \
\text { Debt outstanding } & \$ 5,000,00 & \% \text { Equity } & 60 \% \
\text { Shares outstanding } & 5,000,000 & \text { Tax rate } & 40 \%
\end{array}$$
A) 37.2%
B) 39.1%
C) 41.2%
D) 43.3%
E) 45.5%

Quizplus · Accepted Answer

The Answer of Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend model and also maintains its target capital structure, what will its dividend payout ratio be? $$\begin{array} { l c l c } 
\text { EBIT } & \$ 2,000,00 & \text { Capital budget } & \$ 850,000 \
\text { Interest rate } & 10 \% & \% \text { Debt } & 40 \% \
\text { Debt outstanding } & \$ 5,000,00 & \% \text { Equity } & 60 \% \
\text { Shares outstanding } & 5,000,000 & \text { Tax rate } & 40 \%
\end{array}$$
A) 37.2%
B) 39.1%
C) 41.2%
D) 43.3%
E) 45.5%

Dentaltech Inc A) 372% B) 39

Dentaltech Inc A) 372%
B) 39