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Dividendpolicy-1

# Dividendpolicy-1 - 250,000 1,100,000 = 22.72 2 Scholes...

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Name: ________Michael Samuels_____________________ Signature: ________________________________________ BADM 115 – Financial Management and Markets “Connecting the Dots” CASE 11 – Dividend Policy 1. Scholes Motors has a capital budget of \$1,100,000, but it wants to maintain a target capital structure of 50% debt and 50% equity. The company expects to pay a dividend of \$250,000. If the company follows a residual dividend policy, what is its forecasted dividend payout ratio?
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Unformatted text preview: 250,000 / 1,100,000 = 22.72% 2. Scholes Motors earned \$5.00 per share in 2006, and paid a dividend of \$2.00 per share. If it earns \$5.50 in 2007 and follows a constant payout ratio policy, its dividend will be? 2 / 5 = .4 5.5 * .4 = 2.20 3. Scholes Motors earned \$5.00 per share in 2006, and paid a dividend of \$2.00 per share. If it earns \$5.50 in 2007 and maintains a constant nominal payout policy, its payout ratio will be? 2.00 / 5.50 = 36.36%...
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