Education homework help
Education homework help. Crawford Inc. uses a residual dividend policy. A debt/equity of 1.0 is considered optimal. Earnings for the period just ended were $1,400, and a total dividend of $420 was declared. (a) How much new debt was taken? What was the total capital expenditure for investment? (b) Suppose the company has 5,000 shares outstanding. The average tax rate on dividend is 15% and the tax rate on capital gain is 30%. What do you expect the company’s share price will drop after the dividend is paid.
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