1. Assume that SSC has an $800,000 capital budget planned for the coming year. You have determined c. that its present capital structure (60% equity and 40% debt) is optimal, and its net income is forecasted at $600,000. Use the residual dividend model to determine SSC's total dollar dividend and payout ratio. In the process, explain how the residual dividend model works. Then explain what would happen if expected net income was $400,000 or $800,000. 2. In general terms, how would a change in investment opportunities affect the payout ratio under the residual dividend model? 3. What are the advantages and disadvantages of the residual policy? (Hint: Don't neglect signaling and clientele effects)