Pavlin Corp

Multiple Choice

Pavlin Corp.'s projected capital budget is $2,000,000,its target capital structure is 40% debt and 60% equity,and its forecasted net income is $900,000.If the company follows the residual dividend model,how much dividends will it pay or,alternatively,how much new stock must it issue?

A) $462,983; $244,352
B) $487,350; $257,213
C) $513,000; $270,750
D) $540,000; $285,000
E) $ 0; $300,000