Corporate - Section 24 - EOC # 13 - Residual Divident policy

[cipherap15]

Given capital spending of 15 million, Earnings = 25 milllion and D/E 35/65 find the Payout ratio. The problem I’m having is finding the Residual Dividend.
Throughout the chapter I’ve used Residual Dividend = Earnings - ( Capex * D/V ) = 25 - ( 10 * 65/100)
But in this question they use Residual Divend = Earnings - Capex = 25 - 10 = 15
Anybody help me out here. Much appreciated.
Thanks

 

[cipherap15]

Must be overtthing this….but anybody?
How can you dividend out the entire amount of earnings remaining after removing for CAPEX? There’s an equity ratio of E/V = .65 in the question. Isn’t the entire point of the residual dividend model to pay out as dividends the amount of internal money remaining after paying for the periods CAPEX?