Morrison Movers's Optimal Capital Structure Calls for Financing Seventy Percent

Multiple Choice

Morrison Movers's optimal capital structure calls for financing seventy percent of new assets with equity. Assuming that Morrison Movers has net income of $5 million, how much can be paid out in the form of a dividend and still have sufficient funds to cover a $6 million capital budget?

A) $0, it needs all of the funds for expansion.
B) $ 800,000
C) $4,200,000
D) $5,000,000