Residual dividend model question 26 EOC

CFA Level II Corporate Finance
#1

Hi,

For question 26, why are they not considering the capital structure when calculating the dividend payout ratio under the residual dividend policy?

Thanks!

#2

The question did state that:

Assume that Wilson Chemical funds its capital spending out of its estimated full year earnings.

If there is a specific condition, don’t use the capital structure given.

1 Like
#3

Ok I missed that. Thanks for pointing this out.