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$2.00 Optimal Dividend Payout Ratio

• From Business: Finance , Economics: Financial-Markets
• Closed, but you can still post tutorials
• Due on Jan. 10, 2008
• Asked on Jan 03, 2008 at 2:58:18PM

Q:

Owens Manufacturing has generated a net income of $ 750,000 for 2007. It has identified investment opportunities for 2008 totaling $ 900,000. If the firm has a target capital structure of 70% equity, and 30% debt, the firm’s optimal dividend payout ratio (assuming only retained earnings will be used) under the residual model is ?

 

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