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? $$\begin{array} { l l r } \text { EBIT } & \$ 2,000,000 \text { Capital budget } & \$ 850,000 \\\text { Interest rate } & 10 \% \% \text { Debt } & 40 \% \\\text { Debt outstanding } & \$ 5,000,000 \% \text { Equity } & 60 \% \\\text { Shares outstanding } & \$ 5,000,000 \text { Tax rate } & 40 \%\end{array}$$

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

Correct Answer:

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