1. Terrell Corp. has a capital budget of $6,000,000. The company's target capital structure is 45% debt and 55% equity. Its forecasted net income is $4,000,000. If the company follows a residual dividend policy, what total dividends, if any, will it pay out?
A. $0 $700,000
B. $1,300,000
C. $2,000,000
D. None of the above
2. Jordan Imports' recent IPO had terms of 20 million shares, offer price $10 per share, proceeds to the company $180 million. The investment banker incurred out-of-pocket expenses of $10 million and the company incurred expenses of $1 million. This is an example of a:
A. Best efforts deal
B. Hybrid deal
C. Negotiated deal
D. Private placement
E. None of the above