Banerjee Inc.wants to maintain a target capital structure with 30% debt and 70% equity.Its forecasted net income is $825,000,and its board of directors has decreed that no new stock can be issued during the coming year.If the firm follows the residual dividend model,what is the maximum capital budget that is consistent with maintaining the target capital structure?
A) $1,143,214
B) $954,643
C) $1,178,571
D) $1,296,429
E) $1,437,857

Question

Quizplus · Accepted Answer

11ea856c_8b76_00ff_9aec_a5504e21348e_TB1222_00 Check: Is calculated Max capital budget × % Equity = Net income?
$825,000 = Net income