Getler Inc.'s projected capital budget is $2,000,000, its target capital structure is 40% debt and 60% equity, and its forecasted net income is $1,000,000. If the company follows a residual dividend policy, how much dividends will it pay or, alternatively, how much new stock must it issue?
Dividends Stock Issued
| a. | $ 0 $200,000 | |
| b. | $541,500 $171,475 | |
| c. | $570,000 $180,500 | |
| d. | $514,425 $162,901 | |
| e. | $600,000 $190,000 |
Ans : A.
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