Solved: How large should wei dividend payout ratio be next year, Accounting Basics

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How large should wei dividend payout ratio be next year

Problem:

The Wei Corporation expects next year's net income to be $15 million. The firm's debt ratio is currently 40 %. Wei has 12 million of profitable investestment opportunites, and it wishes to maintain its existing debt ratio. According to the residual distribution model (assumiming all payments are in the form of dividends), how large should Wei's dividend payout ratio be next year?

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Accounting Basics: How large should wei dividend payout ratio be next year

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