BA350 Financial Management: 18-1 Axel Telecommunications has a target capital structure

Financial Management

18-1 Residual Dividend Model
Axel Telecommunications has a target capital structure that consists of 70% debt and 30% equity. The company anticipates that its capital budget for the upcoming year will be $3,000,000.
If Axel reports net income of $2,000,000 and it follows a residual distribution model with all distributions as dividends, what will be its dividend payout ratio?
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