Brooks Corp.'s projected capital budget is $2,000,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $600,000.If the company follows a residual dividend policy, what total dividends, if any, will it pay out?

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Under a residual dividend policy, dividends are paid out from the remaining net income after all capital expenditures are funded. Brooks Corp. needs $800,000 in equity (40% of $2,000,000) for its capital budget. Since its net income is $600,000, which is less than the required equity, no dividends will be paid out.