Profit margin = 25%
Payout ratio = 960,000/2,400,000 = 40%
Expected Estimated retained earnings = 8,700,000x25%x (1-0.4) = 1,305,000
Profit margin = 30%
Payout ratio = 1000, 000/2,500,000 = 40%
Expected Estimated retained earnings = 7,800,000x30%x (1-0.4) = 1,404,000
Answer no 2
Project B is more profitable as compared to project A.
So Project B is suggested project.
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RE: MGT201 GDB 1 Solution and Discussion