Bavarian Brewhouse had after-tax earnings of $1,500,000 in 2004.The company needs $2,500,000 for new investments and plans to finance 50% of those investments with debt.If Bavarian Brew follows a residual dividend policy,what total dividend will be paid?

Question

Quizplus · Accepted Answer

equity needed = 2,500,000(.5)= 1,250,000
residual = 1,500,000 - 1,250,000 = 250,000

Bavarian Brewhouse Had After-Tax Earnings of $1,500,000 in 2004