Calcualate the maximum funds that will be available

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Polar ltd predicts that profits in the coming year will be 32 million. there are 8 million shares in issue and the company maintains a debt/equity ration 2.

a) Calcualate the maximum funds that will be available for investments without issuing new equity and the increase in borrowing that goes along withit?

b) Suppose the firm uses a residual dividend policy, and planned capital expenditures total million, what will the dividend per share amount be?

c) In part of b) how much borrowing will take place?

d) If the company plans no capital outlays for the coming year, what is the dividend payout ratio and the associated new borrowing?

Reference no: EM131157389

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