Banerjee Inc. wants to maintain a target capital structure w…

Banerjee Inc. wants to maintain a target capital structure with 35% debt and 65% equity. Its forecasted net income is $150,000, and its board of directors has decreed that no new stock can be issued during the coming year. If the firm follows the residual dividend model, what is the maximum capital budget that is consistent with maintaining the target capital structure?

The federal government sometimes taxes dividends and capital…

The federal government sometimes taxes dividends and capital gains at different rates. Other things held constant, if the tax rate on dividends is high relative to that on capital gains, then individuals with low taxable incomes should favor stocks with low payouts and high-income individuals should favor high-payout companies.