Brend Inc has projected its investment opportunities over a 3 year planning horizon. The cost of each year’s investment and the amount of internally generated funds available for reinvestment for that year is given below. The firm’s debt to equity mix is 35 percent debt and 65 percent equity, which they would like to maintain. There are currently 100,000 common shares outstanding.
Calculate the dividend per share and the total external financing required each year if the firm followed a residual dividend policy?
Calculate the dividend per share each year if the company followed a constant dividend payout ratio of 40 percent?