Calculate the maximum investment funds

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Segura Corporation predicts that earnings in the coming year will be $45,000,000. There are 24,000,000 shares and Segura Corporation maintains a debt-equity ratio of 3.

a) Calculate the maximum investment funds available without issuing new equity. Maximum investment funds = $?

b) What will be the increase in borrowing to have the above investment funds? New borrowing = $?

c) Suppose the firm uses residual policy. Planned capital expenditures total $72,000,000. Based on this information, what will the dividend per share be? Dividend per share = $? per share

d) In part (c), how much borrowing will take place?New borrowing = $?

e) In part (c), What is the addition to retained earnings?Addition to retained earnings = $?

f) Suppose Segura Corporation plans no capital outlays for the coming year. What will the dividend per share be under a residual policy?Dividend per share = $?

g) In part (f), what will new borrowing be? New borrowing = $?

Reference no: EM131435315

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