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Cross Corporation has Net Income of $4,095. Their retention ratio is 65%. How much will they payout in dividends this year?

Question

Cross Corporation has Net Income of $4,095. Their retention ratio is 65%. How much will they payout in dividends this year?

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Solution

Sure, here's how to calculate the amount Cross Corporation will payout in dividends this year:

  1. First, understand that the retention ratio is the percentage of net income that is retained by the corporation rather than paid out as dividends. In this case, the retention ratio is 65%, which means 35% of the net income is paid out as dividends (100% - 65% = 35%).

  2. Next, calculate the amount of net income that will be paid out as dividends. To do this, multiply the net income by the payout ratio (which is 1 - the retention ratio).

    So, 4,095∗354,095 * 35% = 1,433.25

Therefore, Cross Corporation will payout $1,433.25 in dividends this year.

This problem has been solved

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