Problem:
Jaguar Inc. maintains a debt-equity ratio of .60 and follows a residual dividend policy. The company has aftertax earnings of $3,100 for the year and needs $3,000 for new investments.
Requirement:
Question: What is the total amount Jaguar will pay out in dividends for this year?
A. $0
B. $1,125
C. $1,225
D. $1,875
Note: Provide support for your underlying principle.