Posted: December 27th, 2016
xyz has a capital budget of$60 million, it opitimal capital structure is 40% debt and 60% equity. Its EBIT was 98 million for a year. Has 200 million in assets and pays 10%on all of its debt. Tax rate is 35%. If the firm uses a residual policy, what will be the amount of the dividends it pays after financing its capital budget?
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