>> Accounting Basics
Problem: Ortinau's Office Products and Supplies (OOPS) follows the constant payout ratio dividend policy by paying out 40 percent of earnings each year. This year, OOPS expects the dividend payment to be 7 percent higher than last year's payment, which was $130,000.
Question 1: What is the amount of net income that OOPS expects to generate this year?
Question 2: If its target capital structure calls for 50 percent common equity, what will be the total funds the company can invest in capital budgeting projects this year before new common stock must be issued to raise new funds?