Bachelor’s Bus Co. uses the residual dividend model to determine its common dividend payout. This year the company expects its net profit to be P2 million, and it expects to have a 25 percent common dividend payout ratio. The company’s target debt ratio is 40 percent, and the firm is financed with only common equity and debt. What is the company’s forecasted total capital budget for the year?

Bachelor’s Bus Co. uses the residual dividend model to determine its common dividend payout. This year the company expects its net profit to be P2 million, and it expects to have a 25 percent common dividend payout ratio. The company’s target debt ratio is 40 percent, and the firm is financed with only common equity and debt. What is the company’s forecasted total capital budget for the year?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 11P

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