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What is the optimal amount the corporation should payout

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Question - ABC Corporation needs $1.5 million to fund a new investment. The forecasted net income by the corporation is $1.1 million. The corporation has a residual dividend policy and wants to strictly maintain a target capital structure of 20% debt and 80% equity.

a. If all the ABC Corporations distributions are in the form of cash dividends, what is the optimal amount the corporation should payout as dividends?

Reference no: EM132564990

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