Lowe Co. has a capital budget of $1,200,000. The company wants to maintain a target capital structure that consists of 60 percent debt and 40 percent common equity. The company forecasts that its net income this year will be $600,000. If the company follows a residual dividend policy, what will be its payout ratio?

Question

Quizplus · Accepted Answer

The Answer of Lowe Co. has a capital budget of $1,200,000. The company wants to maintain a target capital structure that consists of 60 percent debt and 40 percent common equity. The company forecasts that its net income this year will be $600,000. If the company follows a residual dividend policy, what will be its payout ratio?

Lowe Co Has a Capital Budget of $1,200,000