Silvana Inc. projects the following data for the coming year. If the firm follows the...
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Finance
Silvana 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 | 35% |
| a. | 47.7% | |
| b. | 40.2% | |
| c. | 43.1% | |
| d. | 48.3% |
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