Suppose a firm has a retention ratio of 35 percent and net income of $3.0 million....

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Question

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?

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Answer 1

Answer #1

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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Answer 2

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Add Answer to: Suppose a firm has a retention ratio of 35 percent and net income of $3.0 million....

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Suppose a firm has a retention ratio of 35 percent and net income of $3.0 million....