Financial Management: 18-2 Petersen Company has a capital budget

Financial Management

18-2 Residual Dividend Model
Petersen Company has a capital budget of $1.2 million. The company wants to maintain a target capital structure which is 60% debt and 40% equity. The company forecasts that its net income this year will be $600,000.
If the company follows a residual distribution model and pays all distributions as dividends, what will be its payout ratio?
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