Finding the dividend payout ratio and retention ratio


Task1. Dynamo Corp. Generates annual cash flows of $150 and is anticipated to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows and 7 percent for the debt. You currently own 10 percent of the stock. How much are your cash flows?

Task2. Melba's Toast has the capital structure with 30% debt and 70% equity. Its pre-tax cost of debt is 6%, and its cost of equity is 10%. The firm's marginal corporate income tax rate is 35%. What is appropriate WACC?

Task3. Trade winds Corp. has a revenues of $9,651,220, costs of $6,080,412, interest payment of $511,233, and tax rate of 34 percent. It paid dividends of $1,384,125 to shareholders. Find out the firm's dividend payout ratio as well as retention ratio.

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Financial Accounting: Finding the dividend payout ratio and retention ratio
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