Gale Co. follows a residual distribution model. It has a capital budget of $2 million....
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Gale Co. follows a residual distribution model. It has a capital budget of $2 million. The company forecasts that its net income this year will be $1.2 million. a. The company wants to maintain a target capital structure that is 35% debt and 65% equity.
a) What will be its total dividend payment? Do they need to issue new equity?
b) The company wants to maintain a target capital structure that is 45% debt and 55% equity. What will be its total dividend payment? Do they need to issue new equity?
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