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2. What happens to Gainesboro's financing need and unused debt capacity if: a. no dividends are paid? b. a 20% payout is pursued? c. a

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2. What happens to Gainesboro's financing need and unused debt capacity if: a. no dividends are paid? b. a 20% payout is pursued? c. a 40% payout is pursued? d. a residual payout policy is pursued? Note that case Exhibit 8 presents an estimate of the amount of borrowing needed. Assume that maximum debt capacity is, as a matter of policy, 40% of the book value of equity

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