Residual dividend model: payout ratio 10. McClelland Industries has a capital budget of $1,500,000, but it wants to maintain a target capital…

Residual dividend model: payout ratio

10. McClelland Industries has a capital budget of $1,500,000, but it wants to maintain a target capital structure of 30% debt and 70% equity. The company expects to pay a dividend of $450,000. If the company follows a residual dividend policy, what is its forecasted dividend payout ratio?

a. 30.00%

b. 33.33%

c. 37.50%

d. 40.00%

e. 42.55%

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