Problem 14-10 - 4 Reg Dividends 1.10*3,600,000= $3,960,000...

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Amber Wolridge FI-516 Week 1 Assignment Problem 14-10 A. 1. 2011 Dividends - 1.10*$3,600,000= $3,960,000 2. 2010 Dividend Payout Ratio- 2010 Dividend / 2010 net income 2010 Payout- $3,600,000/$10,800,000= .33 2011 Dividend Payout= 2010 Payout Ratio * 2009 Net Income = .33* $14,400,000= $4,800,000 3. Debt Finance= .40*8,400,000=3,360,000 Equity Finance =8,400,000-3,360,000=$5,040,000 2011 Dividend= $14,400,000-5,040,000= $9,360,000
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Unformatted text preview: 4. Reg Dividends- 1.10*3,600,000= $3,960,000 Extra Dividend - $9,360,000-$3,960,000= $5,400,000 B. I would recommend policy 4 because the investor would receive a regular dividend of $3,960,000 plus an extra dividend of $5,400,000. It would give the potential investors a more accurate outlook of Keenan Company’s financing budget....
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