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Question
David Rose Inc. forecasts a capital budget of $500,000 next year with forecasted net income of $400,000. The company wants to maintain a target capital structure of 30% debt and 70% equity. If the company follows the residual dividend policy, how much in dividends, if any, will it pay?a. $42,869
b. $45,125
c. $47,500
d. $50,000
e. $52,500
Answer
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