ABC telecom in is expected to generate $240 million in net income over the next year. ABC Telecom INC stockholders expect it to maintain its long run dividend payout ratio of 40% earnings. If the company wants to maintain its current capital structure of 60% debt and 40% equity, what is the maximum capital budget it can support with this year’s expected net income? IF ABC telecom INC reduces the amount of its forecasted capital budget, how will this affect the firm’s annual dividend, assuming that all other factors are held constant? A. The amount that ABC telecom INC will pay out in dividends this year will increase. B. The amount that ABC telecom INC will pay out in dividends this year will decrease. What kind of company is most likely to follow a strict residual distribution policy? A. A firm with table, predictable earning and investment B. A firm whose investments need change often. C. All companies D. A firm whose earnings are cyclical and follow the economy If you were to graph a firms earning, cash flows and dividends over the past 20 years, which would you expect to be the most stable over time? A. Earning B. Dividends C. Cash flows