Problem:
P&D Co. has a capital budget of $1,000,000. The company wants to maintain a target capital structure which is 30 percent debt and 70 percent equity. The company forecasts that its net income this year will be $800,000.
Required:
Question: If the company follows a residual dividend policy, what will be its total dividend payment?
(a) $100,000
(b) $200,000
(c) $300,000
(d) $400,000
(e) $500,000
Question regarding the total dividend payment