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Question
Pavlin Corp.'s projected capital budget is $2,000,000, its target capital structure is 40% debt and 60% equity, and its forecasted net income is $1,150,000. If the company follows the residual dividend model, how much dividends will it pay or, alternatively, how much new stock must it issue?a. $00; $50,000
b. $42,500; $39,500
c. $52,500; $50,500
d. $40,500; $48,500
e. $52,500; $56,000
Answer
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