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What is the maximum dividend per share could pay

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Your firm has net income of $12.0 million and an existing debt/equity ratio of 60:40. Going forward its debt to equity ratio will be 70:30.

Problem a) Using the residual method, what is the maximum dividend per share you could pay if you have a capital expenditure project of $6.5 million and 1.2 million shares outstanding?

Problem b) If you pay no dividend at all, what is the maximum capital expenditure program you can sustain?

Problem c) what is the max capex you can do if you pay a $3.30 dividend per share. Show all your work

Reference no: EM132958867

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