Problem:
Puckett Products is planning for $4.5 million in capital expenditures next year. Puckett's target capital structure consists of 50% debt and 50% equity.
Required:
Question: If net income next year is $2.8 million and Puckett follows a residual distribution policy with all distributions as dividends, what will be its dividend payout ratio?
Note: Please explain comprehensively and give step by step solution.