Silvana Inc A) 372%
B) 39

Silvana Inc.projects the following data for the coming year.If the firm follows the residual dividend policy and also maintains its target capital structure,what will its payout ratio be? $\begin{array}{l}\begin{array}{lcl}\text { EBIT } & \$ 2,000,000 & \text { Capital budget } &\$ 850,000 \\\text { Interest rate } & 10 \% & \% \text { Debt } &40 \%\\\text { Debt outstanding } & \$ 5,000,000 & \% \text { Equity } &60 \%\\\text { Shares outstanding } & \$ 5,000,000 & \text { Tax rate }&40 \%\end{array}\\\end{array}$

A) 37.2%
B) 39.1%
C) 41.2%
D) 43.3%
E) 45.5%

Correct Answer:

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