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Forecasted dividend payout ratio

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Portland Plastics Inc. has the following data. If it follows the residual dividend policy, what is its forecasted dividend payout ratio?

Capital budget $12,500
% Debt 40%
Net income (NI) $9,250

a. 19.68%
b. 23.65%
c. 18.92%
d. 17.22%
e. 15.70%

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Solution Summary

The solution explains how to calculate the forecasted dividend payout ratio under a residual dividend policy.

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