Question
In: Finance
Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual...
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?
| EBIT | $2,600,000 | Capital budget | $1,325,000 | |
| Interest rate | 10% | % Debt | 40% | |
| Debt outstanding | $4,900,000 | % Equity | 60% | |
| Shares outstanding | 5,000,000 | Tax rate | 25% |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Country Farmlands, Inc. is considering the following potential projects for this coming year, but has only $200,000 for these projects:
Constraints on borrowing. Country Farmlands, Inc. is
considering the following potential projects for this coming year,
but has only $200,000 for these projects: Project A: Cost
$60,000, NPV $4,000, and IRR 11% Project B: Cost $78,000, NPV
$6,000, and IRR 12% Project C: Cost $38,000, NPV $3,000, and
IRR 10% Project D: Cost $41,000, NPV $4,000, and IRR 9%
Project E: Cost $56,000, NPV $6,000, and IRR 13% Project F:
Cost $29,000, NPV $2,000, and IRR 7% What projects should...
Whitman Antique Cars Inc. has the following data, and it follows the residual dividend model. Some...
Whitman Antique Cars Inc. has the following data, and it follows
the residual dividend model. Some Whitman family members would like
more dividends, and they also think that the firm's capital budget
includes too many projects whose NPVs are close to zero. If Whitman
reduced its capital budget to the indicated level, by how much
could dividends be increased, holding other things constant?
Original capital budget
$3,000,000
New capital budget
$2,150,000
Net income
$3,500,000
% Debt
33%
eBook Ziege Systems is considering the following independent projects for the coming year: Project Required Investment...
eBook
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
10.75%
High
B
5 million
13.25
High
C
3 million
8.75
Low
D
2 million
7.75
Average
E
6 million
11.75
High
F
5 million
11.75
Average
G
6 million
5.75
Low
H
3 million
10.50
Low
Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting...
Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
13.25%
High
B
5 million
10.75
High
C
3 million
8.75
Low
D
2 million
8.00
Average
E
6 million
11.75
High
F
5 million
11.75
Average
G
6 million
6.00
Low
H
3 million
10.50
Low
Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
14.75%
High
B
5 million
12.25
High
C
3 million
10.25
Low
D
2 million
9.50
Average
E
6 million
13.25
High
F
5 million
13.25
Average
G
6 million
7.50
Low
H
3 million
12.75
Low
Ziege's WACC is 10.75%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
12.50%
High
B
5 million
15.00
High
C
3 million
10.50
Low
D
2 million
9.50
Average
E
6 million
13.50
High
F
5 million
13.50
Average
G
6 million
7.50
Low
H
3 million
12.00
Low
Ziege's WACC is 11.00%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
11.25%
High
B
5 million
13.75
High
C
3 million
9.25
Low
D
2 million
9
Average
E
6 million
12.25
High
F
5 million
12.25
Average
G
6 million
7
Low
H
3 million
11
Low
Ziege's WACC is 9.75%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
11.50%
High
B
5 million
14.00
High
C
3 million
9.50
Low
D
2 million
9.25
Average
E
6 million
12.50
High
F
5 million
12.50
Average
G
6 million
7.25
Low
H
3 million
11.50
Low
Ziege's WACC is 10.00%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
12.25%
High
B
5 million
14.75
High
C
3 million
10.25
Low
D
2 million
9.75
Average
E
6 million
13.25
High
F
5 million
13.25
Average
G
6 million
7.75
Low
H
3 million
12.00
Low
Ziege's WACC is 10.75%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
14.25%
High
B
5 million
11.75
High
C
3 million
9.75
Low
D
2 million
9.75
Average
E
6 million
12.75
High
F
5 million
12.75
Average
G
6 million
7.75
Low
H
3 million
11.25
Low
Ziege's WACC is 10.25%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
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