4. Reynolds Paper Products Corporation follows a strict residual distribution policy. All else equal, which of the following factors would be most likely to lead to an increase in the firm's distribution?

a.)The company increases the percentage of equity in its target capital structure.

b.)The number of profitable potential projects increases.

c.)Earnings are unchanged, but the firm issues new shares of common stock.

d.)The firm's net income increases.

e.)a and b.

5. If a firm adheres strictly to the residual distribution policy and the target capital structure, and all payments are in the form of dividends, then the issuance of new common stock during the year would suggest that

a.) the dividend payout ratio is increasing.

b.)the dividend payout ratio is increasing faster than expected.

c.) the dollar amount of investments has decreased.

d.)no dividends were paid during the year.

e.)a and d.