Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. ades inc. expects ebit of $325,000,000 this year.

Ades Inc. expects EBIT of $325,000,000 this year. Its capital structure consists of one quarter...

70.2K

Verified Solution

Question

Finance

image

Ades Inc. expects EBIT of $325,000,000 this year. Its capital structure consists of one quarter debt and three quarters equity, and its marginal tax rate is 28%. The total value of the company is $2 billion. The cost of equity is 14%, and the company pays a 9% interest rate on its debt. There are 25 million shares outstanding. The CFO of Ades sets the capital budget for new annual investments to 90% of their net income. If the firm follows a residual dividend policy, what is its expected dividend payout ratio? O A. 26.25% O B. 38.52% O C. 32.50% OD. 30.11%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

In purchasing a house that is worth $175,000, you need to obtain a mortgage. Suppose you...

Chemistry
1.2K views

The Keq for the conversion of A to B is 1.15 x 10-3. the Keq for...

Statistics
1.2K views

For Exercises 49–52, identify the independent and dependent variables for each study. 49.A study was conducted to...

General Management
1.2K views

A diet needs to be created that contains not less than 2146 calories, not more than...

Accounting
1.2K views

Your employer has chosen to expand operations into Italy. Research tax compliance issues in Italy. Identify and...

Physics
1.2K views

A parallel plate capacitor is charged to potential difference V by a dc source The...

Basic Math
1.2K views

Express the following as afunction of a single angle.tan 145 + tan 85/1- tan 145...

Basic Math
1.2K views

A designer builds a model of a canoe. The finished model is exactly the same...

Calculus
1.2K views

A record club has found that the marginal profit P x in cents is given...

Accounting
1.2K views

Two popular methods of financial statement analysis are horizontal and vertical. In your own opinion,...

Accounting
1.2K views

Question 1 Assume that you have $20,201 to invest in a term deposit, and there...

Finance
1.2K views

Word Problem #1 (3 points each) You Dave the opporunty to buy a single tenant,...