Suppose a firm has a retention ratio of 35 percent and net income of $3.0 million....
Suppose a firm has a retention ratio of 35 percent and net income of $3.0 million. How much does it pay out in dividends?
Homework Answers
Retention Ratio = 35%
Dividend Payout Ratio = (1 - Retention Ratio) = (1 -35%) = 65%
Payout in Dividends = (Net income) * (Dividend Payout Ratio)
= $ 3.0 million * 65%
= $ 1.95 million
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