Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend policy and also maintains its target capital structure, what will its payout ratio be? EBIT
$2,000,000
Capital budget
$850,000
Interest rate
10%
% Debt
40%
Debt outstanding
$5,000,000
% Equity
60%
Shares outstanding
$5,000,000
Tax rate
40%
A) 37.2%
B) 39.1%
C) 41.2%
D) 43.3%

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The Answer of Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend policy and also maintains its target capital structure, what will its payout ratio be? EBIT
$2,000,000
Capital budget
$850,000
Interest rate
10%
% Debt
40%
Debt outstanding
$5,000,000
% Equity
60%
Shares outstanding
$5,000,000
Tax rate
40%
A) 37.2%
B) 39.1%
C) 41.2%
D) 43.3%