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Silvana Inc A) 372%
B) 39

Question 22

Multiple Choice

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?
 EBIT $2,000,000 Capital budget  Interest rate 10%% Debt  Debt outstanding $5,000,000% Equity  Shares outstanding $5,000,000 Tax rate $850,00040%60%40%\begin{array}{l}\begin{array}{lc}\text { EBIT } & \$ 2,000,000 \text { Capital budget } \\\text { Interest rate } & 10 \% \% \text { Debt } \\\text { Debt outstanding } & \$ 5,000,000 \% \text { Equity } \\\text { Shares outstanding } & \$ 5,000,000 \text { Tax rate }\end{array}\begin{array}{r}\$ 850,000 \\40 \% \\60 \% \\40 \%\end{array}\end{array}


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

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