Assignment:
1) Portland Plastics Inc. has the following data. If it follows the residual dividend model, what is its forecasted dividend payout ratio?
Capital budget$12,500
% Debt40%
Net income (NI)$11,500
2) Becker Financial recently declared a 2-for-1 stock split. Prior to the split, the stock sold for $80 per share.If the firm's total market value is unchanged by the split, what will the stock price be following the split?
3) Fauver Industries plans to have a capital budget of $650,000.It wants to maintain a target capital structure of 40% debt and 60% equity, and it also wants to pay a dividend of $225,000.If the company follows the residual dividend model, how much net income must it earn to meet its investment requirements, pay the dividend, and keep the capital structure in balance?