Crickentree has a target capital structure of 30 percent debt and 70 percent equity.If the firm expects to have a net income of $1.7 million and a dividend payout ratio of 40 percent, what will be its equity break point?

Name: Crickentree has a target capital structure of 30 percent debt and 70 percent equity.If the firm expects to have a net income of $1.7 million and a dividend payout ratio of 40 percent, what will be its equity break point?
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Question

Quizplus · Accepted Answer

x = $1.7(1 - 0.4)/0.7 = $1.457 or $1,457,143

Crickentree Has a Target Capital Structure of 30 Percent Debt