Residual Dividend policy policy, therefore, understand, should

mdfb79

In EOC Q 13, Reading 31, page 180, I dont understand the answer. According to my understanding of residual dividend, the answer should be

25 - (15*0.65) = 15.25 and therefore, dividend payout ratio = 15.25/25 = 61%?

troymo

The key here is..

"to be entirely funded out of earnings."