1) The Garlington Corporation expects next years net income to be $15 million. The firms debt/assets ratio currently is 40 percent. Garlington has $12 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual dividend policy, how large should Garlingtons dividend payout ratio be next year?

2. Last year, Axel Tires retained $180,000 of the $450,000 net income it generated. This year, Axel generated net income equal to $510,000. If Axel follows the constant dividend payout ratio dividend policy, how much should be paid in dividends this year?