Answer:
Total dividends will be zero since residual dividend policy gives a negative dividend of $200000
Explanation:
Following the residual dividend policy,the dividends payable to shareholders can be calculated with the below formula:
residual dividend =forecast net income -(equity percentage * capital requirement)
Residual dividend=$600000-($2000000*40%)
Residual dividend=$600000-$800000
Since dividends cannot be taken as negative figure,dividends is nil
Alternatively dividends can be reduced to available net income after payment of interest and taxes
