#3). Saskatoon Pasta Factory (SPF) expects this years earnings to be $48 million. There are 8.4 million shares outstanding with current market price of $45 per share. SPF maintains a strict debt to equity ratio of 1.5. SPF is considering three projects with expected investment outlays as follows: Show math and formulas

Project	A	B	C
Initial outlays (Millions)	$26	$60	$86

A. Assume that the three projects are all equally desirable and SPF would like to finance as many of them as possible (wish to invest the highest possible amount of cash), which projects can be financed without issuing new equity? (5 marks)

B. Suppose SPF uses a residual dividend policy, what will be the dividend per share if SPF maintains its debt to equity ratio and follows your recommendation from Part (a)? (7 marks)

C. If SPF insists to invest in the three projects, what will be the number of shares it must sell to finance them?

(6 marks)