1.Big company needs $800,000 in order to buy a new equipment for its business. Big net...
Homework Answers
The correct Answer is d)
As you can see the capital structure is D/E= 1/3.
To arrange the funds of $800,000 while maintaining this capital structure BIG company can borrow $200,000 (i.e. $800,000*1/4) and use its earned income of $600,000 (i.e. $800,000*3/4).
So,BIG can payout $700,000 ($1300,000-$600,000) as dividend.
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1.Big company needs $800,000 in order to buy a new equipment for
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