Suppose a firm has a retention ratio of 23 percent and net income of $4.3 million....
Suppose a firm has a retention ratio of 23 percent and net income of $4.3 million. How much does it pay out in dividends? ( Enter in dollars not in millions).
Dividend Amount _______________
Homework Answers
First we will calculate the dividend payout ratio as below:
Dividend payout ratio = 1 - Retention ratio
Dividend payout ratio = 1 - 0.23 = 0.77 or 77%
Now,
Dividend amount = Net income * Dividend payout ratio
Dividend amount = $4300000 * 77% = $3311000
Add Answer to:
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