15 Case model - PowerPoint slide presentation. (1) Assume...

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15 Case model 3/22/2010 7:09 Chapter 15. Distributions to Shareholders: Dividends and Share Re PART C Equity ratio 60% Debt ratio 40% Expected capital budget $800,000 Forecasted net income $600,000 Alternative NI forecast (1) $400,000 Alternative NI forecast (2) $800,000 Required equity capital = Capital budget x Optimal equity ratio Required equity capital = $800,000 x 60% Required equity capital = $480,000 Residual = For. NI - Req. Equity Capital Residual = $600,000 - $480,000 Residual = $120,000 Payout ratio = Dividend / For. NI Payout ratio = $120,000 / $600,000 Payout ratio = 20% Residual = For. NI - Req. Equity Capital Residual = $400,000 - $480,000 Residual = ($80,000) Residual = For. NI - Req. Equity Capital Residual = $800,000 - $480,000 Residual = $320,000 Payout ratio = Dividend / For. NI Payout ratio = $320,000 / $800,000 Payout ratio = 40% This spreadsheet model is designed to be used in conjunction with the chapter's integrated cas
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Unformatted text preview: PowerPoint slide presentation. (1) Assume that SSC has an $800,000 capital budget planned for the coming year. You have de capital structure (60% equity and 40% debt) is optimal, and its net income is forecasted at $600 dividend model approach to determine SSCs total dollar dividend and payout ratio. In the proce residual dividend model is. Then, explain what would happen if net income were forecasted at $ A B C D E F G 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 2/21/2006 epurchases se and the related etermined that its present ,000. Use the residual ess, explain what the $400,000, or at $800,000. H 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41...
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15 Case model - PowerPoint slide presentation. (1) Assume...

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