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Calculate the resulting dividend payout ratio

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Chancellor Industries has retained earnings available of $1.20 million. The firm plans to make two investments that require financing of $950,000 and $1.75 million, respectively. Chancellor uses a target capital structure with 660% debt, and 40% equity. Apply the residual theory to determine what dividends, if any, can be paid out, and calculate the resulting dividend payout ratio.

A. The dividend amount, if any, that can be paid out is $______ (ROUND TO NEAREST DOLLAR)

B. The resulting dividend payout ratio is ____% (round to one decimal place)

Reference no: EM131114072

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