Question 1: Plato Inc. expects net income of $5,000,000 next year. Plato's target capital structure is 35% debt and 65% equity. Management estimates that the optimal capital budget for the coming year is $6,000,000. If Plato follows a residual dividend policy, what is its payout ratio?
Question 2: Simon Utility expects net income of $5 billion this year. The company has an estimated capital budget of $4 billion, and its capital structure is 65% common equity and 35% debt. If the company follows a strict residual dividend policy, what is the company's expected dividend payout ratio?
Question 3: A firm has current after tax earnings of $1,000,000 and has declared a cash dividend of $400,000. The firm's dividend payout ratio is..??