Strict residual dividend policy

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Reference no: EM13980941

Red Zeppelin Corporation follows a strict residual dividend policy. Its debt-equity ratio is 2.5.

a. If earnings for the year are $190,000, what is the maximum amount of capital spending possible with no new equity?

b. If planned investment outlays for the coming year are $760,000, will Red Zeppelin pay a dividend if so, how much?

c. Does Red Zeppelin maintain a constant dividend payout why or why not?Sep 02 2014 02:26 AMWant an Answer?

Reference no: EM13980941

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