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The board of directors of the company has asked for expected capital

budgeting and the residual dividend payouts for the next year. The best planned capital investment appears to require a capital budget of $5,000,000, while available retained earnings are forecast to be $3,000,000. The policy for capital structure is 45% debt and 55% equity. 


(A)  Determine the apparent dividend payout ratio and amount of potential dividends.


(B)  Under a residual dividend policy, what is the relationship between the amount of capital investments undertaken and the dividends paid? 

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Subject: Business, Finance
The board of directors of the company has asked for expected capital budgeting and the residual dividend payouts for the next year. The best planned...
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