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Ades Inc. expects EBIT of $325,000,000 this year. Its capital structure consists of one quarter...

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Ades Inc. expects EBIT of $325,000,000 this year. Its capital structure consists of one quarter debt and three quarters equity, and its marginal tax rate is 28%. The total value of the company is $2 billion. The cost of equity is 14%, and the company pays a 9% interest rate on its debt. There are 25 million shares outstanding. The CFO of Ades sets the capital budget for new annual investments to 90% of their net income. If the firm follows a residual dividend policy, what is its expected dividend payout ratio? O A. 26.25% O B. 38.52% O C. 32.50% OD. 30.11%

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